, there was only one way for the us dollar to go. down. that adjustment was both inevitable ( eventually ) and healthy. pretty much every country in the developed world has seen its currency rise in value against the us dollar. but our currency has appreciated more than most in the last year. while on average, the currency has only returned to more normal levels, against the australian dollar it has risen to levels that are not far off record highs. while many new zealanders have been trying to make sense of our currency ’ s sharp rise, many commentators across the tasman have been grappling with the question of why the australian dollar has risen so little against other currencies so far. indeed, in one recent global survey in which financial market commentators were asked which currency was likely to rise most this year, the australian dollar was the overwhelming favourite. two things seem to explain much of the new zealand dollar ’ s sharp rise. first, our economy has performed very well indeed, surprisingly well in the last year or so. new zealand is one of the few developed countries where economic forecasts were revised up last year. amid a rather gloomy world outlook, investors have been attracted to favourable growth surprises. and second, it was a year when solid secure fixed income returns seemed to come back into focus among the investor community. moody ’ s now rate new zealand as aaa, and of course new zealanders ’ appetite for debt has meant we have long had interest rates that have been somewhat above those of most developed countries. two of the other strongest currencies last year were the norwegian krone and the south african rand, both economies with higher interest rates than those in new zealand. at the margin, the fact that our current account deficit has been smaller than usual may also have contributed the world has been keen to put money here at just the time when we ’ ve needed a bit less than usual. the us, of course, scored poorly all round : it has had a high and widening current account deficit, low interest rates, and a continued disappointing growth outlook. but what of the rise against the australian dollar? first, we ’ ve had higher interest rates than australia ( and the gap has increased somewhat ) in a period when secure fixed income returns have been particularly attractive. second, validly or otherwise, markets have taken the view that the new zealand economy is growing more robustly than australia ’ s at present ( the drought, fires, and all that ). and third,

the sustained and largely uninterrupted expansion of the global growth in islamic finance has drawn significant international interest. the interest in islamic finance is no longer just from muslim nations but also from non muslim communities. financial centers such as london, france, hong kong and singapore are increasing their efforts to enhance the development of islamic finance in their financial centers. the internationalisation of islamic finance has observed the strengthening of ties between asia and the middle east in trade and investments in the recent years. the early trade ties allowed the old silk road to flourish. today, islamic finance involving financial flows between the two regions has revived and revitalized these economic ties that generate mutually reinforcing growth prospects for both regions. the emergence of new financial centres in asia and the middle east and their increased integration has strengthened the foundations for a new silk road. it has also opened up and extended this potential to developed economies to forge stronger financial linkages with the growth regions of asia and the middle east. our ties with bahrain have long been cemented with the signing of a memorandum of understanding between the central bank of bahrain and the central bank of malaysia in 2001 to jointly develop islamic finance. there is a presence of institutions from bahrain with interest in institutions in malaysia and from malaysia in bahrain, since 2001. in malaysia, they have become part of more than 150 entities that participate in our islamic financial system that offers the spectrum of islamic products and services. while islamic finance has demonstrated its resilience during the challenging period, continuous efforts are being taken to further strengthen its resilience and facilitate effective liquidity management across border. the islamic development bank ( idb ) in collaboration with the islamic financial services board ( ifsb ) has formed two taskforces – the taskforce on islamic finance and global financial stability and the high level taskforce on liquidity management. an important recommendation of the task force on financial stability that has been now operationalised in 2010 is the establishment of an islamic financial stability forum ( ifsf ) to be held twice a year following ifsb council meetings. it forms a strategic platform for productive dialogue to promote financial stability in the islamic financial system. it also has the potential to interface with the financial stability board in the conventional system to serve the common aim of achieving global financial stability. let me conclude my remarks. an important dimension of islamic finance is not only its potential role and relevance in contributing to global financial stability but also its potential to support overall global economic growth. more importantly, it also represents an