our economic policies and reduced the risk premium on canadian bonds demanded by investors. canada ’ s economy, like that of mexico and many others, also underwent structural adjustments in the 1990s, in both the public and private sectors. these adjustments were enormously helpful, because they made the canadian economy more flexible. governments moved to reduce distortions in the economy by eliminating many industrial subsidies, reducing personal income taxes, and reforming the unemployment insurance system. at the same time, enterprises responded to the challenges of trade liberalization by improving the quality of their products and marketing them aggressively to new north american customers. these adjustments were not easy. but they did leave canada ’ s economy in a better position to handle economic shocks and, therefore, to grow on a sustained basis. canada ’ s floating exchange rate helped facilitate these structural adjustments. the depreciating canadian dollar in the late 1990s encouraged foreign demand, which helped to compensate for reduced demand from the government sector. it also helped by sending signals to businesses about the kinds of adjustments that were needed. in sum, a sound macroeconomic policy framework, appropriate structural adjustments, and a floating exchange rate all did their part to help canada ’ s economy adjust to the changing circumstances of the 1990s. while these adjustments were difficult, the payoff came quickly. by the end of the decade, canadians were beginning to see higher real incomes. international forces so that ’ s a quick backward look. let ’ s now consider the ongoing international forces at work in our economies. both canada and mexico are going to need to increase productivity in the face of fierce competition from china and other lower - cost countries. indeed, it is clear that all countries are going to have to find ways to become more competitive. in canada, we have an opportunity in the next few years to again realize solid, steady productivity gains, thanks to past investments in information and communications technology. of course, technology alone is not enough to guarantee higher productivity. to actually realize productivity gains, enterprises must make the necessary investments and organizational changes. and they must train their staff to use technology to its best advantage. other forces in the world economy bear watching. these include significant imbalances in global current - and capital - account flows. and new players, particularly in asia, are becoming increasingly powerful in the global economy. as i ’ ve mentioned, that increases the competitive pressure facing our manufacturers. but it also means new, fast - growing sources of demand, and new opportunities. adjustments in the future in the face

enhancing efficiency and competitiveness of islamic finance include : ( i ) financial engineering and innovation. ( ii ) global financial centers and their regulators support for islamic finance industry. ( iii ) standard governance and prudential regulation and supervisory guidance which require tweaking regulations to properly identify and assign proper weights for new “ building an effective islamic financial system. ” dr. shamshad akhtar, governor of the state bank of pakistan, at the global islamic financial governor ’ s : financial regulators forum in islamic finance, kuala lumpur, 27 march 2007. and different types of risks associated with the special and unique characteristic of islamic finance business. ( iv ) development and adoption of simple and standard and cost effective legal frameworks for contracts associated with the new and hybrid products. ( v ) flexible and practical application and enforcement of shariah principles and injunctions and its acceptability by public. 5. taking up these items, first it has to be emphasized that financial engineering and innovation is one of the most potent tools of islamic finance and will be the key driver to attracting global economic and financial player ’ s interest which will be critical for competitiveness and sustainability of islamic finance. increasingly scholars, academics and practitioners have worked with global banks to offer wide range of wholesale, retail and trade financing banking solutions. for instance : ( i ) vanilla sukuks are now being compliment by range of hybrid sukuks : sukuk – ijara, sukuk - musharaka, sukuk - moharba and so and so forth – as per imf recent study there are today over twenty odd different variants of sukuk. ( ii ) islamic derivative market now offers islamic equivalent of interest rate swap / option called profit rate swap / option and islamic cross currency and fx swap and options. this is appreciable development given that shariah compliant transaction has to fulfill existence of underlying real assets and generally it does not approve of uncertainty ( jahala ) and speculation or undue risk taking ( gharar ). ( iii ) private equity has already structural compatibility with islamic financing, although it has to be deployed for shariah eligible uses. ( iv ) personal banking solutions are now being floated saving and investment account and information technology is used to offer online, atms and telephone banking services. ( v ) by and large products are structured on murabaha principles where funds are allocated for particular projects or finance an asset ( such as home ownership and automobiles ) in