these, very briefly, are the lines along which the governing council of the ecb reaches monetary policy decisions. our strategy ensures a high degree of continuity with the german bundesbank ’ s monetary policy. this has allowed the eurosystem to benefit from the reputation of germany ’ s central bank. at the same time, the strategy takes account of the fact that monetary authorities are confronted with uncertainty. this is reflected in the broad - based assessment of the risks for price stability, based on both pillars. the uncertainties are greater for the eurosystem than for other central banks, given the additional uncertainties associated with emu. the transition to monetary union has changed the behaviour of economic agents, partly because the differences in interest rates that used to exist between the countries of the euro area have almost disappeared. the most striking element in our strategy is the separate pillar for money in a broad sense. although we call it the first pillar, this does not in itself mean that it is the most important one. the factors which are decisive in determining the prospects for price stability depend entirely on circumstances. money growth is, at the moment, not the decisive factor. it has for some time clearly exceeded the reference value and the resulting situation of ample liquidity could, over the longer term, lead to upward inflationary pressures. there is currently little danger of this given the present economic weakness. although the first pillar may not always be the most important one, money remains the logical starting point for our analysis. as a central bank, the nederlandsche bank naturally has closer ties to money than to other sources of inflation. to exaggerate slightly : money is our product, so that is what we first focus on. from a more academic viewpoint, a good case may be made for treating money separately. macroeconomic models for short - term forecasts usually do not assign a specific role to money, although in a monetary economy, every real transaction is offset by a financial one. viewing real phenomena from a financial angle therefore often provides new insights. our strategy emphasises the fact that monetary factors are important, though not all - important. in the short run, wage developments and other cost factors are of great significance for inflation. in a sense, therefore, monetary policy in the eurosystem, like that of the netherlands in former times, may be characterised as " moderate monetarism ". accordingly, the members of the ecb governing council take all indicators into consideration. our procedure ensures that monetary

multinational corporations, to micro enterprises and to households while at the same time, facilitates financing of international trade and cross border investment activities. this recent decade has also seen significant milestones being achieved in the area of international financial infrastructure that supports the development of islamic finance. the islamic financial services board or ifsb, established in 2002 as an international prudential standard setting body for islamic finance, now has a membership of 50 regulatory authorities. it has developed prudential standards ranging from capital adequacy requirements to standards for governance and risk management. there has also been the development of degree programmes and professional qualifications in islamic finance that are now being offered by major institutions of higher learning and training organisations from around the world. more recently, conscious efforts to initiate platforms for greater engagement among practitioners, scholars and regulators have brought about greater convergence and standardisation of shariah interpretations and thus enhancing the potential for product harmonisation which has in turn supported greater cross border transactions in islamic finance. challenges faced by the islamic financial industry during this same decade, despite enjoying rapid growth, islamic finance has also experienced its most challenging period. today we face an environment of financial uncertainties and economic turmoil. the global economy and international financial system has been shaken by a series of unprecedented financial meltdowns in the international environment. much has been said and documented about the financial mess that the crisis has created. unprecedented policy responses were initiated to stabilise conditions. now, significant steps are being taken by the international community to reform and strengthen the international financial system. the aim is to build the foundations for a stronger international financial system and global economy that is built on the premise of sustainable growth and a greater shared prosperity. this global resolve is in congruence with the role and relevance of islamic finance on the global economic environment in this post - crisis era. while the amount of funds managed in the islamic financial system is still only a fraction of the total assets of the international financial system, it represents that portion of financial activities that is truly supported by underlying productive capacity that connects with the real economy. despite the unprecedented disruptions in the international financial system, studies show that the islamic financial industry has weathered the global financial crisis relatively well. the financial crisis has thus brought about a greater appreciation amongst the international financial community on the distinct nature and in - built strengths of islamic finance. based on the shariah requirement that islamic financial transactions needs to be supported by an underlying economic activity, its expansion contributes to income and wealth creation. in addition