the islamic interbank and foreign exchange markets are integral to the efficient functioning of the islamic banking system. they facilitate the liquidity operations of islamic banks and promote financial stability. in addition, they serve as an important transmission channel for the implementation of monetary policy as well as the central bank's role as lender of last resort. the creation of a well - developed islamic capital market is also important as it provides the users of capital with an alternative and cost - efficient source of longer - term financing, and accords investors with a wider range of financial instruments to suit their different risk profiles. and at the core of any financial system lies an efficient and robust payment system for the clearing and settlement of payments. other financial infrastructure that provides support to the development of the islamic banking sector includes the mortgage corporation to undertake the securitisation of house financing, a credit guarantee corporation to provide guarantee schemes to the sme industry, and a rating agency to rate the islamic financial instruments and a deposit insurance scheme to provide the necessary safety net for depositors should also be developed. in addition, the auditing, tax and legal firms must have the right talents to provide their services to the islamic financial institutions. these ancillary institutions must have the ability to provide their services that are in accordance with the shariah principles. tenth, consumer education and awareness about islamic banking is critical to its success and future development. a consumer education programme needs to be developed to enhance public awareness of the features of islamic banking products and services. translating the action plan into reality the appropriate islamic banking system for a country would be largely based on the national agenda of the respective countries, the objectives that the system hopes to achieve and the available resources. for the adoption of a dual banking system, the conventional banks have the option of offering islamic banking products on a window basis or via full - fledged islamic branches or an islamic subsidiary. conventional bank may also be converted to operate as an islamic bank. alternatively, the islamic banking system may only comprise islamic banks newly created to operate in parallel with the conventional banking system. in addition, the government can upgrade existing islamic savings institutions to islamic banks ; license foreign islamic banks as a consortium or on joint venture with local banks ; or a combination of these options to achieve its objective. alternatively, a country may wish to adopt a system - wide islamic banking and finance, a single banking system that fully accords the shariah framework. allow me to take the opportunity to present the malaysian experience. the

zeti akhtar aziz : building a progressive islamic banking sector - charting the way forward speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the seminar on 10 - year master plan for islamic financial services industry, “ building a progressive islamic banking sector charting the way forward ”, putrajaya, 22 june 2005. * * * " the islamic financial services industry is now at the threshold of its next stage of development. this decade has seen significant progress being achieved. islamic finance has now gained wide acceptance as a form of financial intermediation. the sustainability of this progress, however, demands due attention to the future - to look beyond the near term, and to take a longer - term perspective into the needs of the future and to evolve an islamic financial system that will best serve these needs. an essential part of this process is the clarity of the vision and the objectives that are to be achieved. this provides the starting point for the formulation of a master plan which defines the blueprint for the future development of islamic finance. while envisioning the future will provide the strategic focus and the common goal to be achieved, of greater importance will be the actions that need to be taken to make it happen. " your excellencies distinguished guests, ladies & gentlemen, i am most honoured to be invited to speak at this seminar on the ten - year master plan for the islamic financial services industry organized by the islamic development bank and the islamic financial services board to discuss the key issues and considerations in the formulation of a master plan for the development of islamic banking and finance. our goals are to develop an efficient, progressive and comprehensive islamic financial system that is able to contribute to the overall growth process and development. in this first session on the banking sector, the focus of my address will be on the blueprint for building a progressive islamic banking sector. this will include a discussion of the building blocks that are necessary to provide the foundations on which subsequent enhancements can be built. i will also take this opportunity to share with you malaysia's experience in formulating a ten - year financial sector master plan which was launched in 2001, and our experience in the implementation of the plan, in particular, for the development of the islamic banking sector. the need for a master plan islamic finance is now taking on a new dimension to meet the changing requirements of consumers and businesses ; to participate in a more liberalized and globalised environment and to become increasingly more internationally integrated. the