##ks have also come from the high savings economies including from asia and the middle east. as a new asset class, it has generated demand from both conventional as well as islamic financial investors. the sukuk is therefore not only an attractive instrument for investment but it is also a competitive means for raising long term funding needs. strengthening synergies between financial centres two important trends have increased the integration of islamic finance into the international financial system – the accelerated development of the islamic financial markets and increased liberalisation. the development in the islamic financial markets has contributed to the availability of a wide spectrum of islamic financial instruments that has ranged from instruments to manage liquidity, to structures for financing of mega investments. the higher level of foreign participation in the islamic financial markets which has resulted in the increase in cross border flows in the international islamic financial system thereby, enhancing international financial linkages between financial systems. liberalisation has also brought greater foreign institutional presence in islamic financial systems resulting in greater diversity of players and strengthening further the international financial linkages. malaysia has very much been part of this process. in 2003, the islamic financial system was liberalised to allow for increased foreign presence. in 2007, the sukuk market was liberalised to allow the raising of funds by eligible corporates from any part of the world in any currency. and this year, the first foreign currency sukuk of usd1. 5 billion was successfully issued by our petroleum corporation with a significant over subscription by investors from europe, middle east and asia. as the international dimension of islamic finance gains momentum, it is necessary to facilitate the potential for liquidity management across borders. as part of an international collaborative effort, a task force on liquidity management was set up by the ifsb and the idb early this year to develop solutions to enhance the efficiency of islamic financial institutions in managing liquidity at both the national and international levels. a further area of international collaboration is towards promoting value - added investment in human capital building as a long term solution to sustainable growth of the islamic financial industry. the establishment of talent development and research institutions in islamic finance are now increasingly wide spread in several jurisdictions with several strategic alliances across borders being entered into. the international centre for education in islamic finance ( inceif ) in malaysia was set up by the central bank with programmes for practitioners and post - graduate studies to ensure the continuous supply of talent in islamic finance. the current enrollment in inceif are from more than 60 countries attracting students including from the uk, canada

is already a broad international consensus on the prudential areas that need to be enhanced, different regulatory parameters may be necessary to address the specific risks and unique characteristics of islamic finance. the islamic financial community thus needs to effectively respond to this, by strengthening their internal capability to make sound assessments on the need for making similar regulatory reforms that are specifically attuned for islamic finance to achieve the common objective of financial stability. with this in mind, i am pleased to inform you that following the recent completion of the work by the task force on islamic finance and global financial stability, that was jointly formed by the islamic development bank ( idb ) and the ifsb in 2009, the report has now been released following the endorsement by the ifsb council in khartoum, sudan, in april this year. the report examines the conceptual elements inherent in islamic finance that form the foundation of its strengths and contribution towards financial stability. the report also provides a preliminary assessment on the performance of islamic finance during this recent international financial crisis. the final part of the report outlines eight key recommendations to further strengthen the foundations of the islamic financial system in a more challenging global environment. although the islamic financial services industry has generally performed well in the face of the recent global financial turbulence, there are clear lessons to be learnt from the crisis. the recommendations were therefore developed upon careful reflection on the conditions and financial practices that have contributed to the global crisis, as well as the current direction of the global regulatory reform. a central theme of the recommendations in the report is the need for greater collective efforts to be given to putting in place eight building blocks for strengthening the financial infrastructure of islamic finance and its institutional capacity both at the national and international levels. the building blocks identified in the report relate firstly to the global implementation of the ifsb prudential standards ; second, the development of systemic liquidity management infrastructure ; third, the establishment of strong financial safety nets ; fourth, putting in place an effective crisis management and resolution framework ; fifth, strengthening the accounting, auditing and disclosure standards ; sixth, the development of an effective macro - prudential surveillance framework ; seventh, having in place credible rating institutions ; and eighth, to institute close international cooperation and coordination among countries in achieving financial stability. this also includes cooperation in the area of capacity building and talent development. addressing these eight areas are highlighted in the report as being fundamental to ensuring the continued development of a robust and resilient islamic financial system, that can effectively preserve financial stability and contribute