future. the development of the stock exchange is therefore related to the prevailing economic climate and to the households ’ and companies ’ expectations regarding the development of the economy. research indicates that a fall on the stock market affects household confidence relatively quickly, that is already after two to four weeks. 5 the indicator of swedish consumer confidence in the economy published by the national institute for economic research tends to fall when the stockholm stock exchange falls ( see figure 6 ). there may therefore be good reasons for believing that the recent falls on the stock markets of the world are one of the reasons why the swedish households have become more cautious and are expected to increasing their saving. financial turbulence has also led the companies to lower their expectations regarding the period ahead and to begin to postpone investments. all in all this has a dampening effect on economic activity in sweden. high sovereign debts abroad affect sweden as we have noted, the level of debt is high in the euro area and the united states. following many years of budget deficit, what were in many cases already weak public finances were further undermined in connection with the financial crisis of 2008 – 2009. in 2009, the average budget deficit in the euro area amounted to 6. 4 per cent of gdp. this figure fell to 6 per cent see for example jansen and nahuis, 2003 ; kremer and westerman, 2004 ; and beckmann, belke and kuhl, 2011. bis central bankers ’ speeches in 2010 and is expected to be 4. 4 per cent in 2011. the average sovereign debt in the euro area increased from 79. 7 per cent of gdp in 2009 to 85. 8 per cent in 2010, and is expected to increase to 88. 6 per cent in 2011. table 1 budget deficit and sovereign debt in the euro area ( percentage of gdp ) budget deficit sovereign debt 6. 4 79. 7 85. 8 4. 4 88. 6 source : imf fiscal monitor the budget deficit in the united states is expected to reach 10. 8 per cent of gdp this year, while the united states ’ gross debt currently exceeds 100 per cent of gdp. in the summer, this situation, in combination with what appeared to be a political inability to deal with the problem of public finances, led the credit rating agency standard & poor ’ s to reduce the credit rating of the united states for the first time in 70 years. the main reason for the increase in the level of debt is that gdp growth decreased and unemployment increased in connection with the crisis

know, there are different acceptations or agreements of fatwas concerning the approval of certain products. in other word, there are still some unresolved issues in fiqh muammalah for certain sharia products. while such differences are well understood and in islamic tradition are well accepted, we still need to step up our efforts to make product codification as an international efforts as it will certainly have very positive benefits in promoting and facilitating sharia product developments and innovations. product codification provided by international institutions will reduce the gap and promote products harmonization among the countries. excellencies, ladies and gentlemen, secondly, concerning the legal infrastructure and regulatory standard for islamic finance. as mentioned above, product structured based on islamic principles is, by nature, different from its conventional counterparts. hence, it requires a dedicated legal framework confirming with sharia principles. the existing law is not sufficient in solving disputes concerning the sharia transactions. the availability of an appropriate legal infrastructure is particularly important for the development of islamic financial institutions, especially in creating a more conducive environment for sharia transactions to grow efficiently. perhaps, legal framework is one of the most important challenges in developing islamic finance since so far only a limited number of countries have issued specific laws governing islamic finance and dispute settlement, including cross border resolutions. in addition to the availability of legal framework, development of islamic finance also needs global regulations and standards. the existence of global regulations and standards is essential to promote cross - border transactions and foreign participations in the development of islamic finance in asia and other regions. currently, we already have several international institutions, such as ifsb and aaoifi which have authority to issue regulations and standards. the role of those institutions should be enforced and improved. moreover, it would be better if every country that develops islamic finance voluntarily adopt those regulations and standards. for instance, islamic finance regulator in each country is encouraged to adopt voluntarily risks management standard released by ifsb. again, due to its uniqueness, we should not apply the same approach of assessing risks in islamic finance in a similar way with conventional institution. for example, profit - loss sharing portfolio may expose the bank from the loss incurred by the third party. hence, islamic financial institutions should adopt suitable global regulations and standards. it will create regulations uniformity that will spur harmonization and further integration of global islamic finance. my third point will be about islamic financial stability. if we, who are part of islamic finance community, work together in developing financial