##ance in the islamic finance industry deserves appreciation. the islamic financial institutions should be able to play significant roles in the economic development covering all segments in the society. the availability of standards on the microfinance activities is important to ensure operational prudence practiced by the islamic financial institutions when extending their facilities to the low income society. some regulatory incentive needs to be created in terms of relatively lower risk weighted asset to provide lower cost of capital when entertaining the micro - entrepreneurs. although, further research need to take place to find the optimal number and prerequisites when applying the incentives. closing 16. finally, please allow me to wish you all a productive discussion and deliberation in this important seminar. i am confident that supported by internationally reputable academics and players, we can achieve significant outcomes that are beneficial to promote development in the area of microfinance for islamic finance. i wish this program a great success. thank you very much. wassalamu ’ alaykum warahmatullah wabarakatuh. bis central bankers ’ speeches

arrangement through variety of vehicles such as optimization of awqaf funds, innovative zakat disbursement program that is contributive to the job creation initiatives and poverty alleviation program. 11. conceptually, the practice of islamic finance signifies its favor to financial stability and quality economic development which is characterized by the use of risk - sharing concept, discouragement to excessive debt, the emphasis on ethical investment activities, and other sharia specific preferences. the emphasis on equity based investment underlines the importance of reinforcing the basic relationship between financial sector and real economy. 12. the development of islamic financial sector could reduce over - reliance to the debt funding and excessive speculation. having observed from the past economic crises, it has been evidence that excessive debt funding and speculation significantly contributed to the financial system fragility. in relation to the formulation of public preference, the principle to the prohibition of excessive debt taking could serve as a medium of public education that could create positive effect on the moderation of the aggregate demand ; and thus more stable macroeconomic condition. 13. the application of risk - sharing principle could give more gravity to partnership in the society rather than creating lender - debtor relationship. despite the requirement to have a favorable environment that promotes more symmetric market, the application of sharing concept could offer the potential to reinforce the link between financial sector and the real economy which base the financial contracts on value creation and viability of the enterprises. once the transparency and governance are in place to allow better partnership, over - creation of financial engineering can be minimized since the financial activities will be focused on the intrinsic value added offered in the financial contracts. bis central bankers ’ speeches 14. from the governance perspective, the risk sharing concept strengthens the incentive to the financial institutions to exercise appropriate due diligence to the financial transactions assuring that the expected profits commensurate their risk taking. supported by sound information and reporting system, the risk - sharing contract opens up opportunities for the entrepreneur and the financier to monitor and calculate the intrinsic values of the financial transaction that is reflected by its expected profit, cash - flow, risks involved and other influencing factors to the projects. this concept promotes greater discipline and responsibility to all contracting parties to assure its success. the combination of good governance, greater transparency and well - designed risk management would shape trust - based relationship that is essential to make the intermediation process efficient. 15. the attention of the ifsb towards enhancing the role of microfin