and expertise of the islamic financial services board, of which the bsp is an associate member, other international organizations and friendly governments which have signified interest in supporting bsp in this initiative, as well as from the rich experiences of outstanding practitioners of islamic banking. to achieve all these objectives, the bsp intends to work towards attaining a suitable legal framework for islamic banking in the philippines. we are currently in the very early stages of drafting a general law for the creation and regulation of islamic banks. consistent with this, we have included in our list of proposed amendments to our charter, a provision that will enable the bsp to develop regulations for the extension of financial facilities to islamic banks. concluding thoughts ladies and gentlemen, there is much work for all of us to do. the task requires strong partnerships among key stakeholders in the government and the private sector and the support of key international organizations and friendly governments. today ’ s workshop is another important step for all of us to work together, share ideas and mobilize support toward promoting islamic banking and finance in the country. indeed, a well - crafted framework for an islamic banking and finance system would ensure that our goal of stretching the coverage of our financial system [ so it casts a wider net ] is attained. in addition, islamic finance with the vast opportunities it offers could potentially trigger inflows of foreign investments. investments, which in turn, could be deployed towards building the necessary infrastructure and other projects to accelerate and sustain economic growth. for certain, an appropriate islamic banking and finance framework would help ensure that the philippines ’ financial system would truly be a more effective catalyst of broad - based and inclusive growth. on that note, let me wish you a most productive workshop. thank you and good morning. bis central bankers ’ speeches

is 5 ), the seed or reserve money produced by central banks is also called “ high powered money ”. thus, the total money in an economy would be much more than what a central bank would issue to the economy. when that money which is known as money supply chases after the limited availability of goods and services, the general price level would elevate to a higher level. if it happens continuously, inflation sets in an economy imposing an inflation tax on the society. why is there a preference for inflation tax? there is a general preference for inflation tax for several reasons. first, it is easy, quick and convenient to borrow from the central bank, compared to conventional forms of taxes available to a government. such conventional taxes need to be backed by legislation, take time to generate the tax revenue and have to be enforced by an elaborate tax administration. it also runs the risk of failing to generate the required revenue due to tax evasion and avoidance. but, borrowing from the central bank is just a single transaction and the treasury could use it immediately for making payments. second, because of the limitations of the tax bases in developing countries, there is resource paucity for governments to undertake much needed infrastructure projects. hence, it has been argued that the governments in developing countries could initiate the development efforts by mobilizing resources through inflation. the initial inflation so created would get reversed once the new economic development increases the production of goods and services and raises the market supply. so, inflation would become a self - destroying process and, therefore, it is argued that there is no danger of using inflation for economic development. third, taxes are mandatory payments and therefore, there is resistance on the part of tax payers to pay the taxes. because of the pressure coming from the lobbying groups, political authorities too sometimes are unwilling to raise the tax rates to generate higher tax revenue. however, the resistance of the citizens to inflation tax is virtually nonexistent. this is because no one realizes that they are paying a tax to the government, when the prices move up. any resistance by them is not against the inflation tax per se, but against the inflation. that again takes place after sometime when they have been very badly hit by inflation. fourth, inflation is said to be bringing about some salutary effects to an economy from the point of view of its long term growth. it re - distributes income in favor of the rich people who normally save a greater proportion of their income than the poor people.