operates in parallel with the conventional financial system. the malaysian islamic financial system is founded on three major strategies. firstly, the islamic financial system has been evolved as a comprehensive financial system that is diversified in terms of its institutions, markets and players. the islamic financial system comprises the islamic banking institutions, the takaful industry, the non - banking institutions and the islamic money and capital markets. the supporting financial infrastructure includes the robust regulatory and supervisory framework that is reinforced by the legal and shariah framework, the payment and settlement systems and the mechanism for the liquidity operations by the central bank. the assets of the islamic banking system now comprise 16 % of the market, while the takaful sector has garnered 7 % market share. significant progress been achieved in particular in the islamic capital market where the outstanding amount of islamic private securities amounted to usd79 billion or 54. 3 % of the total outstanding private securities in the market. the number of shariah - based unit trust funds have also increased to 136 with a net asset value of over usd5. 2 billion while 85 % of the listed malaysian stocks are shariah - approved counters. the second strategy is to accord greater emphasis on the enabling environment for increased innovation in the islamic financial industry. the product range in islamic finance has now expanded into a broad spectrum of innovative instruments, including investment and equity linked products based on musyarakah, mudarabah and ijarah. these products are competitive both in terms of product structure and pricing. the enhanced depth of the islamic financial markets, in particular, the sukuk market, has increased the attractiveness of the islamic financial instruments as an asset class for investment. the drive for innovation has been supported by the investment in human capital development. a sufficient pool of the talent and expertise has been key to the development of the islamic financial hub in malaysia. the international centre for education in islamic finance ( inceif ) was established in 2006. inceif which has an international faculty and students from more than 40 countries is focused on programmes for islamic finance professionals and specialists in islamic finance. the first group of students for the chartered islamic finance professional qualification, cifp, offered by inceif, is expected to graduate at the end of this year after completing a three year programme that includes an internship with an islamic financial institution. inceif also offers a masters and phd programme in islamic finance. to promote research in islamic finance, the international shariah research academy ( is

shown in the lower section ( dark area ) of the figure. figure 3 : global value chains and inflation for the construction of the data on global value chains, see borin and mancini ( 2015 ). core inflation is calculated net of energy and fresh food products and refers to the average for oecd countries. source : oecd. figure 4 : simulation of the trend in the debt - to - gdp ratio baseline scenario : potential growth ( g ) of 1. 5 % ; average real interest rate on the public debt ( r ) converging to 2. 5 % in about 20 years ; primary surplus ( d ) increasing to 3. 0 % ( in 2020 ). the other scenarios are constructed by adjusting some of the hypotheses in the baseline scenario. yield shock : r increases by 1 percentage point in 2018, converging to 3. 5 % in about 20 years. higher growth : g = 2. 5 %. lower growth and primary surplus : g = 0. 5 % and d = 1. 5 %. lower growth : g = 0. 5 %. references auer r., borio c. and filardo a. ( 2017 ), ‘ the globalisation of inflation : the growing importance of global value chains ’, bank for international settlements, working paper no 602. bank for international settlements ( 2015 ), annual report, chapter iv. banca d ’ italia ( 2017 ), economic bulletin, 1. banca d ’ italia ( 2017a ), financial stability report, 2. banca d ’ italia ( 2018 ), economic bulletin, 1. bartiloro l., bottone m. and rosolia a. ( 2017 ), ‘ what does the heterogeneity of the inflation expectations of the italian firms tell us? ’, banca d ’ italia, questioni di economia e finanza ( occasional papers ), 414. bhansali s. and harris, l. ( 2018 ), ‘ everybody ’ s doing it : short volatility strategies and shadow ’, financial analyst journal. blanchard o. and zettelmeyer j. ( 2017 ), ‘ will rising interest rates lead to fiscal crisis? ’, petersen institute for international economics, policy brief, 17 - 27. bordo m. d. and schwartz a. j. ( 1999 ), ‘ monetary policy regimes and economic performance : the historical record ’, in handbook of macro