the efficiency of islamic financial institutions in managing liquidity at both national and across borders, a liquidity management task force was established by the islamic financial services board ( ifsb ) and the islamic development bank ( idb ) early this year to develop a liquidity management framework. integral to the efforts in the development of islamic finance, is also the strengthening of the regulatory and supervisory framework. the ifsb which was established in 2002 has been instrumental in developing and issuing global prudential standards and guiding principles for the industry. the ifsb has also contributed to the harmonisation in the development of islamic finance across different jurisdictions. apart from the implementation of these prudential standards, there is also a need to ensure the supervisory and legal infrastructure remains relevant to the rapidly changing islamic financial landscape. in malaysia, these efforts are also supported by a comprehensive financial safety net that includes a deposit insurance scheme and a resolution mechanism, so that not only are depositors protected, but it also allows for prompt, effective and least cost resolution of the financial system that can facilitate recapitalization of islamic financial institutions as well as institute programme to remove troubled assets from the books of financial institutions. greater collective effort by international community to strengthen global financial stability in the reform of the international financial architecture, the g20 has launched an ambitious agenda to reform financial regulations, which include key main areas namely, ( 1 ) the strengthening of international frameworks for prudential regulation, ( 2 ) the review of the scope of regulation, ( 3 ) the revision of accounting standards ; and ( 4 ) more effective oversight of the credit rating agencies as well as strengthening risk management. 1 these areas should declaration on strengthening the financial system by leaders of the g20, london 2 april 2009. also be looked at in islamic finance, which has also to deal with additional issues of harmonised regulation. the g20 has agreed to establish a new global financial stability board, with a wider group of developed and emerging countries as part of the new international financial architecture. it will be responsible for coordinating banking regulation, developing regulatory and supervisory standards, preparing early warning reports and exchanging information with supervisors. it is important that this forum gives due recognition to islamic finance given its increasing importance in the international financial system and its potential role in contributing to global financial stability. in the islamic financial industry, the ifsb is at the forefront of international efforts to increase regulatory cooperation, and encourage common rules and enhanced monitoring of international financial risks. the ifsb and the idb

has an important role in building cross - border consensus and collaboration on the strategic direction for the islamic financial services industry for better alignment to the objectives of financial stability. as islamic finance continues to become an integral part of the global financial system, there is scope for the current framework of cooperation to be strengthened and broadened to address the new challenges that have emerged. islamic finance has been inclusive in its development, not only at the national level but also across jurisdictions. at the national level the islamic financial system provides the full spectrum of financial services from the large multinational corporations to micro - enterprises and to households. at the international level, the development and expansion of islamic finance become important in strengthening financial and thus economic linkages between emerging economies. it has allowed emerging economies to participate in its development thus increasing the potential to contribute to the rebalancing of global growth as financial flows not only provides support to domestic demand but also to greater trade and investment flows across borders. concluding remarks in this challenging international financial environment, islamic finance has continued to demonstrate its evolution and strong growth. islamic finance in its advancing journey today is presented with an opportunity to increase the financial linkages with the broader financial system thereby facilitate a more efficient allocation of capital across borders. indeed, islamic finance as an integral part of the international financial system has the potential to contribute to global financial stability and to enhance the prospects for global growth.