financial measures being implemented in the crisis affected economies. a major challenge for most emerging economies in 2011 will be the management of the highly volatile capital flows. the strong growth in asia has and will continue to attract this massive increase in global liquidity in the form of capital inflows into the region. this calls for greater vigilance on the part of the policymakers in the region. several regional economies have already implemented measures including macro prudential measures to preserve macroeconomic and financial stability. against the backdrop of continuing uncertainties, asia is expected to continue to lead global growth, supported by strong macroeconomic fundamentals and sound financial systems. the revival of private sector economic activity has been an important factor in sustaining the strong growth prospects in asia. on the domestic front, the malaysian economy is set to register a growth in the region of 7 % for 2010. while the external sector may be affected by bis central bankers ’ speeches the slower global growth, the growth momentum of domestic demand is projected to be sustained in 2011, supported by the continued firm expansion in private sector activity. most encouraging is that private investment is expected to strengthen and become an important contributor to the growth. achieving financial stability objectives let me now turn to the efforts to achieve greater financial stability. while there is still much work to be accomplished at the international level, an immediate priority ahead is to achieve effective and well coordinated approaches to the implementation of the announced financial reforms. this is important given the greater inter linkages in the global economy. while the outcome of the quantitative impact studies have predicted that the long term benefits of the measures will outweigh the short term costs arising from the adjustments, actual experiences are likely to vary across different jurisdictions. while individual jurisdictions may be confronted with specific challenges of implementation that may arise from differences in economic and market structures, there is also much in common, particularly among emerging economies, that can be shared among jurisdictions. the period of observation on some of the components of the reform package provided by the basel committee is welcomed. it will allow jurisdictions to consider appropriate actions needed to support the effective implementation of the reforms. at the same time, there is an expectation that there will be a willingness by the international standard setting community to adjust or otherwise supplement current prescriptions, frameworks or implementation strategies as more experience is gained under changing market conditions. the effective implementation would also require support for the implementation of the reforms, particularly in the area of capacity building, particularly in the emerging and developing world. inclusive communication channels

mohd razif bin abd kadir : islamic banking products – theory, practice and issues opening remarks by mr mohd razif bin abd kadir, deputy governor of the central bank of malaysia, at the 2nd foundations of islamic finance series conference : “ islamic banking products – theory, practice and issues ”, kuala lumpur, 8 march 2011. * * * i am delighted to be here today and would like to thank the organisers for inviting me to deliver the opening address at this 2nd foundations of islamic finance series conference. following the success of the inaugural conference held last year in dubai, this years event is a commendable collaboration between the organisers ; the international centre for education in islamic finance ( inceif ), the international shariah research academy for islamic finance ( isra ) and the university putra malaysia, to provide an avenue for discussions on various literatures in islamic finance by eminent practitioners and scholars, with the aim to produce quality publications for the industry. the theme of this years conference, “ islamic banking products : theory, practice and issues ” is most timely as waves of innovation are pervasive in islamic finance in the recent years, fostering the generation of a wide spectrum of islamic financial products and services. as the next frontier of development in islamic finance evolves through innovation, we have to be mindful that innovation within an environment of constant change and increasing uncertainties is indeed a challenge. joint efforts between academia and industry to conduct research, to explore and deliberate on issues relating to the development of new islamic financial products, such as the efforts that have led to this conference can therefore provide a point of reference for the industry in ensuring that new and better products are developed to match the diverse and discerning needs of customers, while meeting the requirements of the shariah. the ability of islamic finance, as a form of financial intermediation that provides a range of high quality financial products and services, reflect the innovative and dynamic nature of the industry that contributes to its role as a facilitator of economic activity. together with the fundamental requirements in islamic finance that an underlying productive economic activity accompanies financial transactions, a close link is formed between financial transactions and productive flows. given that islamic financial instruments reflect the underlying economic activities and that such instruments inherently have the potential to provide tangible returns to investors, there have been significant demands on such products. this gives rise to the competitiveness of islamic finance, which is further spurred by the