observing compliance with environmental laws and standards. even boards too have to learn and adapt to the demands of the new operating environment. relevant skillsets are also critical to support innovation within the financial sector to capture opportunities and improve the delivery of islamic financial solutions. indeed, technology can be better optimised to revolutionise the way islamic finance operates and offer innovative solutions to customers. for example, blockchain or artificial intelligence applications hold enormous potential for simplifying documentation requirements associated with shariah contracts, thus improving the overall efficiency of business operations. it should be abundantly clear by now to any financial institution that is serious about vbi, that, the task of building the human and intellectual capital to achieve and sustain value - based business models cannot be left solely to the human resource departments. it requires nothing less than strategic direction and resourcing decisions at the highest levels of the organisation. changing mindsets einstein once said “ the world as we have created is a process of our thinking. it cannot be changed without changing our thinking ”. the world today continues to push the limits of social and environmental thresholds, that are posing increasingly serious threats to humanity. vbi is therefore, much more than a current and passing fad, but a deeper conviction of the critical need 3 / 4 bis central bankers'speeches to begin the process of changing mindsets in a lasting way. financial institutions are a key, but not the only catalysts in this process. customers and investors need to be supported with relevant information, along with the means and ability to compare such information, in order to better understand the value propositions of islamic finance. the encouragement of pension and institutional funds with a sustainable investment orientation, particularly in markets where such funds remain largely underdeveloped, would be important to provide a stronger impetus for vbi. credit rating agencies could also be important contributors to a new landscape, with stronger emphasis on economic, social and environmental sustainability in assessment frameworks and methods. and regulators and policymakers need to be appropriately responsive to the adoption of sustainable practices. conclusion in conclusion, the islamic finance industry today faces an important, strategic choice – to either continue on a path that largely ignores the stark social and environmental realities that confront humanity, or to thoughtfully chart a new path that fully embraces the idea and philosophy of finance beyond profits. the latter will be an unfamiliar path in many respects, but one that is far closer to the fundamental premise of shariah on which islamic finance is based upon.

mechanism : if the banks extend more credit, the result will be more spending, more imports, and the use of more foreign exchange, which ultimately could lead to a decline in foreign exchange reserves. the central bank ’ s monetary policy tries to influence the growth rate of credit extension by the banks to reverse a downward trend in foreign bis central bankers ’ speeches exchange reserves to prevent the reserves from reaching a level at which the stability of the peg is questioned. during the past decades, the main innovation in the central bank ’ s monetary policy has been a shift from direct credit controls to liquidity - driven instruments. before the 1990s, credit ceilings were applied to control credit growth at the commercial banks. in the nineties, these ceilings were replaced by a more flexible credit measure, the monetary cash reserve arrangement. for example, excess credit growth was allowed but at a penalty, and unused growth margins could be traded among banks. nevertheless, prolonged use of credit measures causes rigidities in the banks ’ balance sheets and hampers new banks from expanding, thereby stifling competition in the banking sector. also in the nineties, the first steps towards liquidity driven instruments were taken with the introduction of the reserve requirement and auctions of certificates of deposit ( cds ). under the reserve requirement, the banks have to hold a blocked non - interest - bearing deposit at the central bank determined as a percentage of their domestic liabilities, limiting their access to liquidity for credit extension. the reserve requirement was supplemented by the bi - weekly auctioning of cds, tradable interest - bearing securities, to steer banking liquidity during the fixed reserve requirement period. as of the beginning of this century, the reserve requirement and the auctioning of cds became the central bank ’ s main monetary policy instruments. the reserve requirement and cd auctions worked well under normal circumstances. however, the debt relief provided by the dutch government during 2009 and 2010 as part of the constitutional reforms caused significant excess liquidity in the banking sector. in the year after the debt relief, the unsustainable high deficit on the current account of the balance of payments again became prominent, combined with high credit growth and a declining trend in foreign exchange reserves and the import coverage. these developments prompted the central bank to tighten its monetary policy by increasing the reserve requirement beginning september 2011. given the high excess liquidity, the increase of the reserve requirement was not effective in reducing credit growth and, hence, moderating the decline in our foreign exchange reserves. that