such as residential mortgages and business loans – yet rely on funding that may be relatively short - term, such as customer deposits that can be withdrawn at any time. to have the confidence to commit to longer - term loans and investments, banks must be sure that they will have ample access to funding when necessary. to give this assurance to banks, the federal reserve has made clear that it will provide short - term credit to sound financial institutions as needed. indeed, serving as a lender of last resort to financial institutions is a method that central banks have used for centuries to try to calm financial crises. to underscore our commitment to providing short - term funding to banks when they need it, we have lowered the interest rate we charge for short - term loans and extended the term of the loans to up to three months. we have also begun to auction funds to financial institutions, thereby allowing the interest rate paid to depend on the level of demand. importantly, this lending is extremely safe from the point of view of both the fed and the taxpayer. not only is our lending short - term and restricted to healthy institutions, but we require that the borrowers pledge, as security, collateral whose value exceeds the amount we are lending. the fed's lending to financial institutions has helped to ease conditions in a number of key financial markets, reduced important benchmark interest rates ( such as the london interbank offered rate, or libor, to which payments on some mortgages and other types of loans are tied ), and increased the willingness of banks to make credit available. a second strategy the fed has employed is to use targeted lending to help free up critical credit markets outside of the banking system. a good example of targeted lending is our efforts in the commercial paper market. commercial paper is a form of short - term debt issued by a variety of businesses to finance their operations ; paychecks and payments to suppliers can depend on it. among the largest investors in commercial paper are money market mutual funds. at the peak of the crisis last fall, many people who had invested in money market mutual funds lost confidence in those funds and withdrew their money ; this loss of funding forced money market mutual funds to reduce their own investments, which in turn caused serious problems in the commercial paper market. through a series of lending programs, and in coordination with steps taken by the treasury, the federal reserve helped restore confidence in both money market mutual funds and the commercial paper market. over time, withdrawals from money market mutual

amando m tetangco, jr : islamic banking and finance in the philippines – opportunities and challenges speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the islamic banking and finance workshop, bangko sentral ng pilipinas, manila, 11 march 2014. * * * hon. cesar virata, ms. amina rasul bernardo, mr. warren hoye, mr. saffrullah dipatuan, distinguished resource persons, special guests from the private sector, and multilateral institutions, colleagues in government, ladies and gentlemen, good morning to all of you and a warm welcome to the bangko sentral ng pilipinas. i join our co - organizers, the philippine center for islam and democracy and the foundation for economic freedom, in welcoming you to this islamic banking and finance workshop. this is a valuable opportunity, an occasion where experts from government, private sector and international institutions can share insights, perspectives and ideas on the timely and nationally significant topic of islamic banking and finance. the underpinnings of islamic finance islamic banking is a bit of a mystery to many, particularly in the philippines. while a good number of filipinos may already have an appreciation that islamic finance is not limited to those who are of the muslim faith. not many have a clear understanding of islamic finance being founded on the principles of shariah or islamic law. also, not many know that the shariah is based on the principles of justice, fair dealings and harmony through the equitable distribution of wealth. the most known characteristic of islamic banking is that the shariah prohibits the payment and receipt of a predetermined rate of return. to those who are familiar only with conventional banking, the concept of “ no interest paid or received ” is difficult to comprehend. this construct could lead the purely conventional bankers to think that there are no opportunities to be gained in such an environment. that such a system could also encourage a reversion to an all - cash or barter economy and discourages wealth creation. as i understand it, however, these concerns are farthest from the principles of islamic banking. foundational in islamic finance is the principle of risk sharing. risk sharing is the justification for the fundamental requirements of profit and loss sharing. guarantees or assurances of return of capital and return on capital, rewards without commensurate risk and preferential awards