purchases and has helped investors form expectations about the size of the app and its duration. in particular, we have indicated a minimum horizon – an intended end - date – until which time we plan to carry out net monthly purchases, while retaining the option of extending the programme beyond that intended end - date if the “ sustained adjustment ” condition has not been met. the mutually reinforcing nature of our forward guidance on policy rates and the app became even more evident in march 2016, when the governing council clarified the future sequencing of these two instruments. by stating that policy rates were expected to remain at present levels “ well past the horizon of our net asset purchases ”, the governing council made it clear that keeping policy rates well anchored for the entire lifespan of the asset purchases was an enabling condition for the purchases to exert their full impact. looking ahead, monetary policy will evolve in a data - dependent and time - consistent manner. the transition towards policy normalisation will begin once the governing council judges that there is a sustained adjustment in the path of inflation. this assessment will be based on three criteria for the inflation outlook : convergence, confidence and resilience. convergence implies that headline inflation will have to be on course to reach levels below, but close to, 2 % by the end point of a meaningful medium - term horizon. this first criterion is a necessary but not sufficient condition for a sustained adjustment. the governing council needs to be confident that the expectation of an upward adjustment in inflation has a sufficiently high probability of being realised on a sustainable basis. so, a sufficient degree of confidence in our inflation projections will be a key requirement for declaring that a sustained adjustment has been achieved. our third criterion, resilience, measures the robustness of inflation convergence to a partial withdrawal of monetary policy accommodation. ultimately, we will need to verify that inflation would remain on a sustained path of adjustment even in a less accommodative monetary policy environment. the lessons learnt from the financial crisis have shown that it is crucial to test the confidence criterion and assess the resilience of the economy and of transmission to a partial withdrawal of accommodation. 2 / 3 bis central bankers'speeches the strong cyclical momentum, the ongoing reduction of economic slack and increasing capacity utilisation strengthen our confidence that inflation will converge towards our aim. however, measuring the degree of remaining unutilised resources in the economy remains challenging. in the labour market, the elasticity of labour supply during the recovery has been greater than assumed in

##h compliance of all bank operations. shariah advisory board has shariah scholars but also industry representatives. • bahrain, sudan and syria have adopted shariah standards issued by the accounting and auditing organization for islamic financial institutions ( aaoifi ) and some others use them as guidelines. both the prudential regulation and shariah inspection and supervision are integral elements of the check and balances to ensure products and transactions meet the test of authenticity and compliance with shariah. while these systems may not be in place right away but development and implementation of this regulatory and supervisory infrastructure requires build up of capacities both at institution and regulators level and will pave way for building confidence in islamic system. e. conclusion in conclusion, from a regulator ’ s perspective development of if in tandem with conventional finance will help broaden and deepen financial markets which will help not only meet diverse requirements but will also infuse financial stability. the evolution and path pursued by if industry has triggered debates regarding the authenticity and innovation. what is critical to recognize is that if by design has to be authentic and brings in additionality both in terms of superior corporate governance framework as good ethical practices are embedded in if, and risk sharing structures which along with product diversity that the system offers lend itself to innovation. product proliferation and approaches to security markets, development of islamic exchange and fund management will help nurture financial diversification from bank based to market centric system. proper application of pls system will help provide greater opportunities for innovation provided it is backed by the right corporate governance architecture. on their part regulators have provided the industry free play. cooperation among regulators has helped to develop core and supportive if infrastructure which better weaves in the unique features and nuisance of the if. development of islamic prudential regulatory and supervisory framework, which subscribes to basel standards for conventional banking, will pave the way for development of if, while tweaking the regulations to accommodate special risk characteristics of the if. institutional framework and evolving approaches for supervision systems will help build confidence among investor and customers. it is my belief that proper practical application of if has the potential of taking global finance to new frontiers and heights.