learnt from the global financial crisis. the building blocks include first, ensuring the effective implementation of prudential standards ; second, the development of robust liquidity management infrastructure ; third, the establishment of strong financial safety net ; fourth, having in place an effective crisis management and resolution frameworks ; fifth, further strengthening of the accounting, auditing and disclosure standards ; sixth, putting in place an effective macro prudential surveillance ; seventh, having credible credit rating institutions and processes ; and eighth ; enhancing close international cooperation and coordination among countries, which includes capacity building and talent development. the report further recommends the establishment of an islamic financial stability forum ( ifsf ) based at the ifsb as a strategic platform for productive dialogues to promote financial stability in the islamic financial system. the ifsf would be an important institutional arrangement for the islamic financial system to interface with the conventional system via the financial stability board. with the growing significance of islamic finance in the international financial system, this is critical to constructive dialogue and promotes a comprehensive approach in efforts to strengthen global financial stability. concluding remarks let me conclude. the recent international financial crisis has been a defining event in economic history and its effects will likely cast a long shadow over policymaking in the coming years. as we enter into a gradual stabilisation and recovery period, policymakers are now faced with the challenge to find an enduring solution to ensure the stability of financial systems. islamic finance has a role in shaping the future of the global financial system and reinforcing ethical and moral values that are inherent in islamic finance principles and fundamental towards promoting the stability of the global financial system. ongoing efforts to further strengthen the resilience of islamic financial industry would enhance the prospects for global growth and the potential of islamic finance to contribute towards global financial stability.

economy, the highly diversified economic structure and the strong fundamentals increase malaysia's potential to absorb and respond to the challenging external environment. bank negara's monetary policy has played a supportive role to the economy throughout 2004. going forward, this stance will be maintained. inflation has risen from the earlier low levels but it is expected to remain relatively low in 2005 despite the us dollar depreciation and the higher international price of oil. temporary increases in the inflation rate caused by one - off supply shocks or price adjustments do not warrant a monetary policy response. the focus of monetary policy is to continue to support further expansion in business investment activity to enhance the long - term growth potential of the malaysian economy. during 2004, bank negara malaysia also implemented a number of measures to enhance the operational efficiency and transparency of its monetary policy. in particular, almost one year after its introduction, the new interest rate framework is operating well, with the overnight policy rate providing the signal to the market on the stance of monetary policy. combined with the quarterly monetary policy statement issued by the central bank, the market is provided with regular information on current and expected monetary conditions. the deregulation of pricing under the new interest rate framework has also acted as a catalyst for more efficient pricing in the financial system. against volatile world currency markets, the pegged exchange rate regime continues to accord significant benefits to the malaysian economy by providing greater predictability and stability for international trade and investment. from time to time, isolated developments or rumours have prompted market speculation on the need to review the pegged exchange rate. bank negara malaysia has consistently maintained that the exchange rate regime would not be reviewed unless the ringgit is expected to be fundamentally misaligned or if the regime is no longer consistent with economic fundamentals arising from major structural changes within the international and regional financial systems. it should be noted that while the ringgit has declined with the us dollar, its depreciation against malaysia's trading partners'currencies as a group has been relatively small. given the small degree of undervaluation, the inflation pass - through arising from the weakness in the us dollar is also likely to be small, and consequently, the potential for misalignment is correspondingly small. therefore, the peg exchange rate regime remains fundamentally sound and we expect that it would continue to serve the economy well. any change in the exchange rate regime would be on the basis of longer - term structural considerations and not on account of short - term movements in