to let the krona float and in january 1993 we changed over to the inflation - targeting regime that we have now. another result was that we began designing the framework for a long - run sustainable fiscal policy that has served us so well. one consequence of the fiscal and property crisis was that we began to build up an apparatus to help us monitor and maintain financial stability. for instance, the riksbank ’ s analysis of the financial sector became more structured and systematised, and from 1997 we began to present our analysis in the form of financial stability reports. this financial stability work was, however, far from fully - developed when a new financial crisis broke out just over six years ago, this time on a global scale. for instance, we still lacked a system for crisis management. we also failed to prevent a too rapid credit boom in the baltic region, at the same time as swedish banks proved to have liquidity problems when the dollar market froze. as the new crisis was deeper and affected a much larger number of countries than the crisis at the beginning of the 1990s, it also acted as a stronger and more worldwide signal that major efforts were needed to avoid financial imbalances causing problems in the economy as bis central bankers ’ speeches a whole. the most concrete expression of this opinion was the emergence of the policy area that came to be known as macroprudential policy, which aims to take the overall view of the financial system as a whole that was lacking prior to the crisis. in this context, it is worth pointing out that in sweden the boundary between macroprudential policy and supervision of individual banks, microprudential policy, is not particularly distinct because of the market structure we have, with four dominant major banks. if the stability of one of these banks is threatened, it also entails a threat to the stability of the financial system as a whole. to this extent, one can say that we in sweden have actually been dealing with macroprudential analysis for quite a long time. but this does not mean that there has been a ready - developed, fully - functioning framework for macroprudential policy. on the contrary, it is only fairly recently that the allocation of responsibility for macroprudential policy was made clear, and the framework that includes the financial stability council, which had its second meeting a couple of days ago, was established. “ learning by doing ” in macroprudential policy – as when inflation targeting was introduced the situation with regard to

united states have been looking at ways of separating the deposit - taking and lending activities of banks from their other operations. and regulators are pressing banks to come up with so - called “ living wills ” – to plan for the possibility that the bank might fail. the greatest progress has, however, been made in writing new regulations. at the end of last year the basel committee on banking supervision published its new capital framework for internationally active banks, known as basel iii. basel iii tries to do several things, but its main aim is to ensure that banks have bigger capital and liquidity buffers, so that they will be less highly leveraged than in the past. when a bank could operate at a leverage ratio of $ 1 of equity to every $ 40 of assets, it was clearly too highly leveraged. it meant that losses of as little as two percent on the bank ’ s asset portfolio could wipe out its entire capital. the basel committee has, rightly in my view, set out to make sure that in future banks will not be able to operate with so little capital relative to their assets. how relevant are these developments to the islamic financial industry? islamic finance has been a relative - newcomer to the globalization trend. the industry itself is still comparatively young, having hardly existed 30 years ago. since then it has recorded impressive rates of growth, but even today ’ s $ 1 trillion industry is still relatively small on a global scale. even so, the global financial crisis has given the islamic financial industry a great opportunity. the obvious flaws in conventional finance have created great interest in the islamic financial model. this should provide the basis for the industry to sustain a period of strong growth for the rest of this decade. the growth opportunities are especially strong as islamic finance has its largest presence in rapidly growing economies that have been least affected by the global financial crisis. they should continue to register high rates of growth in the years ahead. if islamic finance is to make the most of these opportunities, it still needs to learn from the mistakes of interest - based finance. as islamic financial institutions expand, they need to make sure that their management and control functions keep pace with their growth. as the global financial crisis shows, there is a bis central bankers ’ speeches need for firms, especially those that become internationally active, to make sure that risk management, control systems, and it are capable of providing an accurate picture of a financial institution ’ s overall risk profile. boards of directors and senior managers also need to ensure that they