correspondingly, the current international discussion on how central banks should act from now on – the question i began with – can essentially be about how one should take the credit cycle into account in a good way and incorporate it into the economic analysis and into practical policymaking. as the origin of the economic recession is the earlier excessive credit boom, much of the focus is on the question of how one can best ensure that this increase in credit becomes more balanced and that the credit boom thus does not go wrong. it is not merely a question of avoiding crises. a high level of indebtedness can cause what one might call debt dominance in the economy, which put constraints on economic policy and leads to general unease over how debt will be reduced – whether this can be achieved in an orderly manner or whether it will be a rapid, abrupt process with substantial negative effects on the economy. riksbank quick to point out the risks with a credit boom i mentioned earlier that prior to the crisis there was a discussion on whether central banks should try “ leaning against the wind ” to dampen the credit boom and the upturn in housing prices that could be observed in a number of countries. one could actually claim that the riksbank was one of the first central banks to clearly highlight the risks linked to household indebtedness and housing prices in its monetary policy agenda, and it was also one of the few central banks that in practice conducted a policy prior to the crisis that to some extent entailed “ leaning against the wind ”. 6 i myself discussed the riksbank ’ s policy at the annual conference in jackson hole in 2007. 7 this was before the crisis had really made itself felt and there was considerable scepticism of a “ leaning against the wind ” policy. when the crisis came, opinion changed and as i see it, there is today considerably more understanding and acceptance for the policy we conducted. during the recovery phase after the crisis, the riksbank has also tried to reduce the risk of exaggerated indebtedness and overly - inflated housing prices by conducting slightly less expansionary monetary policy than would otherwise have been the case. see, for example, mishkin ( 2007 ) and cagliarini, kent and stevens ( 2010 ). heikensten ( 2008 ), writes : “ with house prices increasing drastically, risks for the real economy have been perceived to be bigger. on a few occasions in 2004 – 05 the riksbank did for that reason not follow

over rs. 900 billion and a network of more than 1, 100 branches. given the interest of all stakeholders and a relatively high level of financial exclusion in the country, we believe this expansionary trend is likely to continue and the industry is well set to double its market share by 2020. this success could not have been possible without the leading role of the central bank in setting the direction of the industry and providing unusual support for its promotion and development. promoting islamic finance as a viable and competitive component of the financial system through an enabling legal, regulatory and supervisory environment has remained an important component of sbp ’ s strategic goals. considering the evolutionary stage of the industry, we are continuously engaged in refining and improving the legal and regulatory framework to ensure : a ) its responsiveness to the evolving industry dynamics and b ) its effectiveness in identifying, measuring and mitigating the risks associated with islamic finance. in the recently concluded fiscal year we issued detailed instructions for profit & loss distribution and pool management to bring standardization, improve transparency and safeguard interests of investment account holders ( the savings depositors ). the instructions developed through rigorous consultations with the industry have been well received both domestically and globally. bis central bankers ’ speeches similarly to further improve the shariah compliance environment in ibis, our islamic banking department has completed industry consultations on the draft shariah governance framework and will soon be issuing the same. the framework will be another key milestone achieved, which will institutionalize the shariah compliance function and crystallize the shariah compliance related roles and responsibilities of all key organs of ibis including bods, executive management and shariah boards moreover, to encourage standardization and shariah harmonization, sbp over time has issued permissible islamic modes of finance model islamic financing agreements besides adapting aaoifi shariah standards for the pakistani market in a gradual manner. the continuation of growth momentum achieved during last the 4 – 5 years is contingent on making an objective assessment of the successes, failures and future challenges and developing consensus strategies and action plans to build on the successes and address the challenges. we have accordingly developed the five year strategic plan for islamic banking industry again through a rigorous and meaningful consultation with all key stakeholders. the plan to be issued soon lays down the future road map of the industry, highlight areas of improvement in legal, regulatory and taxation environments, emphasize diversification of products and markets covering non - traditional but strategically important sectors of agriculture and smes and increasing the islamic banking market