Given these responsibilities, the banking institutions therefore need to play their role effectively and efficiently to contribute to the overall stability of the financial system, and the growth and development of the economy. Visioning for the Islamic banking system In charting the future development of the Islamic banking system, due consideration would therefore need to be given to the role of the banking system in the economy. The ultimate goal is to enhance wealth creation, and promote sustainable and balanced economic growth. The vision is, therefore, to develop a progressive and robust Islamic banking and financial system, rooted in the Islamic core values and principles, that best serves the needs of our economies. By indicating the destination in the journey, to developing the Islamic banking industry, the Master Plan would provide a road map to drive convergence towards the common vision among countries in the development of an Islamic financial system. While collective efforts can be directed to achieve this common vision, consideration needs to be given to the stage of development of the respective economies. In particular, the expected role that the banking system needs to fulfill can be identified accordingly. This could range from the development of an Islamic banking system to efficiently intermediate funds in the economy, to having in place a sophisticated Islamic banking and financial system that is internationally integrated and that is in itself, an engine of growth.

In the case of countries that are just embarking on the introduction of Islamic banks, this could be achieved by the issue of new Islamic banking licences. Third, for countries that have a dual banking system, where conventional banks are allowed to offer Islamic banking products, there must be adequate firewalls to ensure absolute separation of banking operations to avoid co-mingling between the Islamic and conventional funds. This is to ensure the integrity of Islamic banking operations and the sanctity of Islamic funds. The firewalls would need to include separate capital funds, cheque clearing systems, clearing accounts with the Central Bank, settlement accounts and reporting systems. Fourth, regardless of the choice of system, it is important that the stakeholders of the institutions play their role effectively and efficiently to generate improvements in the entity. Of importance, is strong leadership in the management team that has a firm commitment toward performance and capacity enhancements. In addition, investments in the requisite talent and skills is essential to spearhead the development of Islamic financial products. Fifth, is the need to put in place a comprehensive legal infrastructure. Enactment of an Islamic banking law is an important part of this process. For conventional banks offering Islamic banking products, amendments to the existing banking legislation may be necessary to allow such banks to undertake trade-related activities and other multi-faceted functions. The investment policy of the Government may need to be reviewed to provide for the issue of Islamic investment instruments to facilitate the liquidity operations of such banking institutions.