of inflation in their monetary policy - making. this means that the differences between the national definitions used by statistical agencies have declined. however, the process of harmonisation has not yet been completed. the harmonised cpi in fact covers too narrow an area in terms of goods and services. several components which are relevant to the general price level are not included. take, for example, rent increases. consequences for monetary policy in view of the problems attending the measurement of inflation, people are right to question whether central bankers still have sufficient insight into inflationary developments. and subsequently, whether central bankers are still capable of conducting adequate monetary policies. such concerns are valid notably in times of low inflation, when the statistical distortions that we are speaking about carry extra weight. in a market economy, any difficulties encountered in the calculation of the index of the general price level need not necessarily give rise to problems right away. an entrepreneur who has decided to purchase new computer hardware will not be swayed by possible statistical distortions in the cpi. neither will you or i, when we visit the supermarket on saturdays to stock up our larders. the essential thing is that entrepreneurs, consumers and other economic agents have proper insight into the value of individual goods. but there is a catch. an inflation gauge which is closely monitored by a central bank may influence the behaviour of economic agents. contracts and labour agreements often refer explicitly to an officially published inflation figure. via this route, distortions in measured inflation can thus affect functioning of the economy. in other words, it is of the utmost importance, not just for the monetary authorities, that price rises be gauged as accurately as possible. in spite of the uncertainties inherent in measuring inflation, the monetary authorities, in formulating their policies, make use of a gauge that seeks to encompass the general price level. how otherwise can one ascertain whether price stability has been achieved. moreover, monetary policy should in principle take effect at the macroeconomic level. however, in order to allow for possible measurement errors, price stability - as indicated by the inflation measure used - is defined more broadly by the central bank. the governing council of the european central bank has recently defined price stability as a rise in the ( harmonised ) consumer price level of less than 2 %. on the one hand, this definition, which is in line with that used in most countries of the euro area, implies that measurement errors occur while, on the other, it stresses that it is one of the tasks of

in - hand to design a better institutional arrangement, tools and instruments to promote effective monetary and macro - prudential policy. in line with that, it is also agreeable that the high level committee of the islamic financial services board ( ifsb ) members called for the islamic financial system to strengthen regulatory and liquidity infrastructures as well as building a healthy and beneficial linkage to the real sectors. bis central bankers ’ speeches excellencies, ladies and gentlemen, besides all the advances in monetary and macro - prudential policies to strengthen financial stability, we are at the stance that structural policies is also crucial in supporting financial system resillience. lesson from the 1997 / 1998 crises, we learned that micro and small enterprises were relatively resistant to economic shocks, giving significant contribution to financial and economy recovery. hence, structural policies need to be promoted to advance wealth distribution to more people, particularly low - income class. in regard to this concept, islamic social sector that covers zakat and awqaf systems can play very important role in accelerating economic development and supporting financial stability. in indonesia, as studied by bank indonesia ’ s researchers in 2012, total of all zakat potential from various sources is approximately rp217 trillion or equivalent to usd22. 6 billion. this number is equal to 3. 4 % of indonesia ’ s 2010 gross domestic product ( gdp ). however, the realisation of those potential zakat is still below our expectation. recent data recorded only rp2. 7 trillion or 1. 2 % of total zakat potential has been received. this is our home - work to explore ways to boost this number. unlike the other commercial sources of fund, the zakat funds would never cause unnecessary burden to the economy since the type of the funds is not commercially claimable, and hence, no excessive social cost will occur. the same also goes to the awqaf sector where, as a matter of fact, more people are endowed with low cost assets. again, potential benefits from those assets has not been materialized yet, because most of the assets are still poorly managed. based on data from indonesian awqaf board, awqaf land has now reached not less than four billions of meter square, a very significant source if we can optimized them. with this huge potential of zakat and awqaf land, we can expect a significant drive to economic development. i personally believe that these ideas are in - line with those of the governments, as well