a new format focused on issues with long - term strategic implications that need to be addressed in the current environment. it is designed to encourage deliberations from the different perspectives between industry participants and bank negara malaysia. the dialogue will also serve as a platform to reflect on recent economic and financial developments and the major policy initiatives by bank negara malaysia. allow me to take this opportunity to share some thoughts with you in these areas. the outlook for the malaysian economy continues to remain favourable, despite some signs of moderating growth in the global economy arising from the higher oil prices. malaysia has had a track record of solid and steady growth for a number of years now. the diversified economic structure and sound macroeconomic fundamentals have been important in supporting this trend. of importance is that this growth is private sector driven. while price pressures have been contained by improvements in labour productivity and capacity expansion, domestic inflation has begun to edge upwards, largely due to cost - related factors. in balancing these trends, monetary policy has continued to remain supportive of growth. growth in asia has also remained strong with mutually reinforcing effects for regional economies, including malaysia, as regional integration continues to intensify. the global environment, however, is clouded by uncertainties amid the persistence of global imbalances. the united states continues to record large deficits in its external accounts. there is significant discussion in the global community on how these imbalances may be unwound. the consensus, however, is clear that the adjustment should be orderly. there has however, been an over focus on realignment of exchange rates to facilitate this adjustment. but this may risk destabilizing adjustments. ultimately, the structural imbalances have to be addressed by some combination of adjustments in demand, prices and exchange rates. in particular, the rebalancing of global growth can be expected to be a major factor contributing to an orderly adjustment to these imbalances. indeed, it would require more than just adjustments in exchange rates. the nature and breadth of the adjustments will be important to achieve a long - term solution. with its young workforce, growing productivity, competitive and dynamic economies, there is great potential for the asian economies to contribute towards the re - balancing of global growth. with rising income levels in regional economies, particularly among the growing middle income group in china, india and the asean economies, there is potential for an expansion of demand within the region. the rebalancing of global growth across the world will eventually

evolved a vibrant sukuk market, more asian countries have turned to the sukuk market for financing large - scale projects including for infrastructure development. several countries in the region are currently reviewing their legislation and taxation to enable debut sukuk issuance. the asian sukuk market has also been progressive in the innovation frontiers. there has also been a growing trend for multi - currency sukuk issuances. this provides greater prospects for tapping a wider pool of investors, including from the middle east and europe. in malaysia and more recently, in indonesia, sukuk issuances have also aimed at retail investors. this is to take advantage of the high levels of surplus savings in asia, whilst providing wider investment options to retail investors that have traditionally invested in bond funds and unit trusts. the trend for greater regional economic and financial integration will also provide substantial opportunities for islamic financial institutions to facilitate the integration process in the region and with other parts of the world, and thus have a greater role in financing asia ’ s future growth. priorities for strengthening financial stability and growth let me turn to the priorities for strengthening financial stability and growth. whilst there needs to be continued efforts at the national level to develop the institutional foundations for islamic finance that will foster effective and efficient financial flows, and ensure that financial stability is preserved, the new wave of internationalization for islamic finance requires increased collaboration across jurisdictions to strengthen the international financial infrastructure of islamic finance. going forward into the future, this will be particularly important given that the international environment has become more challenging. this is to ensure that the greater internationalization of islamic finance takes place in an environment of financial stability. at the national level, the first priority relates to trend for the domestic islamic financial system to become more integrated allowing for risks to be rapidly transmittal across the financial system. this requires the development of enhanced regulatory, supervisory and legal bis central bankers ’ speeches frameworks that are also adaptive and effective to the innovative dynamics and unique mix of risks in islamic finance. fundamental to this is the implementation of the international regulatory and supervisory standards and best practices for islamic finance. the islamic financial services board ( ifsb ) has introduced prudential standards for the islamic financial services industry – in all key areas of capital adequacy, risk management, corporate governance and shariah governance. their implementation would in turn promote more consistent regulatory and supervisory frameworks across borders. importantly, the adoption of these international prudential standards which are aligned to the core principles and