to make great strides in uplifting the living standard of the majority of the people within a short span of time. i am extremely encouraged by the impressive progress that is being made by member countries of the asian clearing union. each and every country is working hard to bring about reduction in the incidence of poverty and improve the human development indicators. there is no doubt that the challenges ahead of us are quite formidable but giving the political will, national determinations and collective action i am sure we will be able to march ahead on the road to progress and prosperity. the last five years have been extremely critical for our own country, pakistan. the strategy of economic revival that was initiated in december, 1999 has been successfully implemented and its main pillars were achieving macro - economic stability, improve the governance, introduce structural reforms and resume the path to accelerated growth. the results of the implementation of this strategy are quite well known and i will not get into the details as pakistan delegation will dwell on them in their presentation. let me briefly add here that the banking sector reforms undertaken by the state bank during the last five years have helped us provide stability and strength to pakistan ’ s financial sector. independence of monetary policy has been a major factor in inculcating financial discipline in the public finances, while autonomy of the state bank in regulating the financial system has been the main strength of reviving the financial institutions of the country. by contributing to financial discipline and financial stability, we have managed to turn a poorly managed financial system into a strong and sound one. the state bank would be glad to share the details of the legal, structural, prudential and administrative changes that pakistan has undertaken in the last five years to reach this stage of stability in the banking and the financial sector of the country. i would like to briefly mention here that country ’ s economy has been continuously growing for the past two years. the gdp for the current fiscal year is likely to be over 7½ per cent which will be the highest growth witnessed in the country during the past 13 years. before concluding, i would once again like to welcome the participants and wish them a pleasant stay in pakistan.

##s for if which are complementary to conventional banking system but which are tailored to capture the different types of risks associated with if, ( iii ) recognizing that if offers an opportunity to diversify financial system to more equity based and better risk sharing instruments than offered by conventional system thereby helping the overall financial system to evolve in a more balanced way, and ( iv ) better understand and appreciate the richness of if which advocates a different liability and asset approach that once effectively acknowledged and applied will offer wide range of opportunities for financial innovation key to the further development and diversification of overall financial system. it is the recognition and implementation of the above goals and objectives that will the lay foundation for an effective financial system. i will now dwell on some of the key preconditions which are critical for laying the foundation for an effective if system. first, it has to be recognized that depending on their circumstances, regulators have adopted varying approaches to develop if system. at this stage, it is too early to pre - judge which approach and model will be effective but success would be contingent on how effectively these institutions are nurtured and supervised. in some jurisdictions regulators have allowed dual systems whereby it issues some additional policies and regulations for ifis over and above the prudential regulatory framework for conventional banks. within this category there are variations with regard to role of regulator in shariah compliance. some countries have declared the entire financial system to be islamic and in others no distinction is made between islamic or conventional financial systems, and the decision to establish islamic bank is with the owners, e. g. saudi arabia and uae. as distinct from these, there is now a wave across developed financial systems, such as u. k and singapore, to introduce specific legislation and regulations to facilitate if transactions. depending on regulators ’ adopted policy stance, approaches to issuance of licensing and role of regulator in shariah compliance varies significantly. for instance, some regulators issue standard form of banking license ( e. g. saudi arabia ) for both islamic and conventional institutions, while others issue separate islamic banking licenses ( e. g. malaysia ). when regulators apply the same criteria and due diligence for licensing both ifis and conventional institutions, they strengthen the competitive forces. use of a separate licensing criterion should be applied carefully ; because relatively lax criterion for ifis will lower industry standards and result in a protected non - competitive class of institutions. second, for long term sustainability and confidence of if sector, it is critical that clients and islamic