middle east. this international integration would contribute towards facilitating greater cross - border flows in terms of increased trade and investment transactions, thereby strengthening the global economic and financial inter - linkages. apart from banking, malaysia is also initiating efforts to promote takaful internationally. this is being done in close coordination with the islamic development bank where a taskforce has been established to spearhead, among others, the development and promotion of trade, investment, islamic banking as well as takaful and retakaful industries among oic member countries. among the main initiatives to be undertaken under a memorandum of understanding signed between malaysia and the islamic development bank is to specifically promote and expand takaful and retakaful businesses in the member countries. a further initiative by malaysia was to access the international capital market with the issuance of global islamic financial instruments. the government of malaysia made this inaugural primary issuance of a globally - accepted sovereign islamic sukuk in 2002. since then, there have been several other issues by other countries. to - date, the total issuance of the four global sovereign sukuk has exceeded usd3. 5 billion. the sukuk has broadened the investor base by creating a new asset class for both islamic and conventional investors. this has also been followed by the issuance of global corporate sukuk, which now amounts to usd12 billion. several of these products are listed on the labuan international financial exchange. in 2004, malaysia liberalised the foreign exchange administrative rules to allow multilateral development banks and multinational corporations to raise ringgit - denominated instruments in the malaysian capital market. towards this end, two institutions, the international finance corporation and the world bank, have issued ringgit - denominated instruments based on islamic principles in our market. this has contributed to enhancing the depth of the market. at the international level, malaysia has also participated actively in initiatives to develop the supporting international islamic financial architecture. the formation of the islamic financial services board ( ifsb ) in 2002 is one of the most important achievements in this development to set the international prudential standards for islamic finance. to - date, the ifsb has made commendable progress, and this includes the issuance of two exposure drafts on capital adequacy and on risk management. work is in progress for three other standards that relate to corporate governance, transparency and market discipline, and the supervisory review process. the ifsb has also played a catalytic role in expanding its membership and outreach,

the downside. they are mainly related to slow implementation of structural reforms in the euro area, geopolitical issues and imbalances in major industrialised countries. these factors have the potential to dampen sentiment for longer than currently assumed and delay further the recovery of private investment, employment and consumption. according to eurostat ’ s flash estimate, euro area annual hicp inflation was 2. 2 % in december 2012, unchanged from november and down from 2. 5 % in october and 2. 6 % in august and september. on the basis of current futures prices for oil, inflation rates are expected to decline further to below 2 % this year. over the policy - relevant horizon, in an environment of weak economic activity in the euro area and well - anchored long - term inflation expectations, underlying price pressures should remain contained. risks to the outlook for price developments are seen as broadly balanced over the medium term, with downside risks stemming from weaker economic activity and upside risks relating to higher administered prices and indirect taxes, as well as higher oil prices. turning to the monetary analysis, the underlying pace of monetary expansion continues to be subdued. the annual growth rate of m3 remained broadly unchanged at 3. 8 % in bis central bankers ’ speeches november 2012, after 3. 9 % in october. m3 growth continued to be driven by a preference for liquid assets, as m1 growth increased further to 6. 7 % in november, from 6. 5 % in october, reflecting inflows into overnight deposits from households and non - financial corporations. following our non - standard monetary policy measures and action by other policy - makers, a broadly based strengthening in the deposit base of mfis in a number of stressed countries was observed. this allowed several mfis to reduce further their reliance on eurosystem funding and helped to reduce segmentation in financial markets. m3 growth was also supported by an inflow of capital into the euro area, as reflected in the strong increase in the net external asset position of mfis. there has been little change in credit growth, which remained weak in november. the annual rate of decline in loans to the private sector ( adjusted for loan sales and securitisation ) remained at – 0. 5 % in november. this development reflects further net redemptions in loans to non - financial corporations. net redemptions, however, were less pronounced than in previous months, amounting to €4 billion in november, after €7 billion in october and €21 billion in september