at a time when global growth prospects are strengthening, but unfortunately this is happening with significant downside risks such as massive payments imbalances and an impending transition to a higher interest rate environment. in fact, the ramifications of globalization are clear when we analyze the effects on many of our smaller and vulnerable economies of a likely hike in interest rates in the united states and generally the shifting global interest rate environment. the continued volatility in world petroleum prices is also another factor which impacts most if not all of our economies. we therefore have to agree that the global liberalization of trade and finance is now well established and we have to accept that there is no turning back for any of us in the region. it is against this background that the caribbean is rapidly forging ahead towards its goal of a single market and economy ( csme ) by december 2004. caricom member states have agreed to remove restrictions on capital mobility, on the establishment of businesses and on the movement of prescribed skills among our countries. as ambassador narace who heads the trinidad and tobago csme unit said recently : “ if we are to succeed from the new hemispheric arrangement offered by the free trade of the americas it would be important for the caribbean to develop strong caribbean brands and the csme does exactly that by providing the environment that would create that ”. the caricom secretariat has already produced a caribbean single market and economy bill and the cgbs has received information of work begun by the caricom secretariat on a model caribbean banking statute. in fact, members have been asked to submit their comments on the document that has recently been circulated. some immediate and obvious concerns that the cgbs has with the bill include : • the reconciliation of csme provisions with international supervision standards and requirements, for example, the need for differential credit ratings in securities originating from other member states based on international capital adequacy standards ; • difficulties with the harmonization of the different legislative frameworks before the dismantling of entry barriers ; and • the role and status of mous under the new proposed arrangements. some of these issues were discussed at length at our recent cgbs conference in the paper presented by the representative of barbados in respect of the harmonization of regional legislative and regulation framework within the context of globalization, a copy of which is available at your request. i will share a joke with you which i find meaningful. “ a group of executives got together for a high - powered meeting. at the

. the intrinsic principle of profit and risk sharing thus provides an in - built check and balance to the islamic financial transactions. a combination of these distinct features together with the implementation of prudential risk management standards and practices would contribute to the robustness and resilience of islamic financial system. mutual respect on shariah matters this decade has thus been a phase of innovation in the global islamic financial system with a number of breakthroughs and major milestones in innovative deals and structures. the advancement of sukuk, islamic securitization, islamic private equity, islamic real estate investment fund and other financial instruments in terms of sophistication and product range has widened the international market reach of islamic finance, particularly in the cross border transactions. at the same time, this phase is also seeing a number of key issues being raised, particularly in respect of divergence of shariah views underlying a number of the islamic financial transactions. while such a divergence of opinions in islamic financial transactions is not a new phenomenon, it has presented a new set of challenges in today's increasingly more globalized market. to forge closer linkages between the global islamic financial markets would require a common understanding and acceptance on the applicable rules and standards. indeed, cross border transactions would require the jurisdictions involved to mutually recognise the validity of respective rules, practices and underlying shariah interpretations. this is key for the orderly development and for advancing the pace of progress of the international islamic financial industry. for this, it is important to have a concerted effort in providing greater clarity on the mutually acceptable strategy for the development of global islamic finance. in the current globalised environment, the role of scholars needs to transcend beyond pure advisory or shariah rulemaking, to a more strategic role in charting industry development. this could be in part be achieved by having global shariah standards for the islamic financial industry. a mutually agreeable position could be achieved with the application of mutually recognized principles and processes to deduce the shariah rulings and views. 1 there are lessons to be drawn from the previous success stories in the history of islamic jurisprudence whereby the strong sense of mutual respect prevailed among muslim jurists with multiplicity of shariah opinions. the jurists from different mazhab had high regard for differing views expressed by other jurists, even in ibadah matters. in relation to this, malaysia has taken a three - prong strategic initiative to promote greater mutual respect of the shariah