the leasing sukuk are the first of their kind to be issued by a central bank. let me turn now to the future prospects for islamic finance. the global economic crisis has forced the financial industry as a whole to reassess its growth prospects for the years ahead. the islamic financial industry has not been exempted from this reassessment, although there are those who argue that the prospects for shari ’ a compliant finance have improved as a result of the crisis. it has been pointed out that islamic financial institutions have escaped relatively unscathed from the severe downturn which is affecting most conventional financial institutions. this certainly presents the industry with an opportunity to continue its rapid and successful growth of recent decades. because interest - based transactions are prohibited, islamic finance encourages business and trade activities that generate fair and legitimate profit. the prohibition on speculative activity also helps to ensure that there is a close link between financial flows and productive activities. these intrinsic properties of islamic finance have contributed towards insulating it from the potential risks resulting from excess leverage and speculative financial activities. for example, shari ’ a compliant financial institutions were unable to invest in the cdos and other structured financial products – the “ toxic assets ” – which have been at the centre of the current crisis. this is not to pretend that the islamic financial industry does not face some important challenges. some of them are specific to global economic conditions, as the clients of islamic financial institutions are no more immune to the global recession that are the clients of conventional banks. however, some of them are more specific to islamic finance. first, islamic finance in its modern form is a relatively young industry. the first islamic banks were licensed little more than 30 years ago. of the 26 islamic finance entities operating in bahrain, nearly half have been licensed within the past 5 years, and nearly three quarters have been licensed in the past 10 years. this has several consequences : few shari ’ a compliant financial institutions have yet been able to achieve significant economies of scale. many remain comparatively small and focused on niche markets. newer entrants to the industry have also exhibited a tendency to copy the business models they see being successfully pursued by their more established competitors. as a result we have an industry which comprises many small - scale firms engaged in very similar activities and with comparatively high concentrations of risk. for the long - term health of the industry it will be important to generate greater scale and diversity. secondly, one of the major constraints on generating scale economies is the difficulty in

in argentina, the monetary policy transmission channels are only just being rebuilt, since credit to the private sector accounts for 10 percent of the economy, still far below the latin american average. therefore, patiently rebuilding the power of monetary policy tools is a great step towards consolidating growth and stability. meanwhile, monetary and financial policy should be conceived under a general equilibrium approach, where fiscal solvency, the monetary balance and external sustainability are mutually determined. against this backdrop, a sustainable and long - lasting reduction of the inflation rate depends on the comprehensive, joint and coordinated action of the monetary policy, the fiscal policy, the wages policy, and the competition policy. thus, we see that the current regime of control over the money supply and the demand for money combines the necessary doses of monetary prudence ( as shown by sixteen running quarters of compliance with self - imposed monetary aggregate growth targets ) and flexibility ( which has enabled us to weather the recent turbulence ). through this scheme, by trading in the repo market, issuing central bank notes and bill, and collecting in advance the rediscounts granted during the crisis, we eliminated any potential excess money supply. in fact, in the first half of the year we sterilized 80 percent of foreign exchange purchases – up to almost ars 25 billion. and this did not affect the bank ’ s positive balance sheet. the monetary program sets indicative targets for all monetary aggregates. however, the achievement of these targets is linked to the change in the means of payment, since in an economy where financial normalization has not yet been achieved, it would be healthy for savings – time deposits – to be more rapidly channeled back into the financial system. deposit performance has not been affected by financial uncertainty and time deposits keep growing above the average. this is another eloquent example of the strategy developed in the past few years to face contingencies : the recovery of banking liquidity and solvency, which allows us to have a sound financial system today that acts as a “ turbulence buffer. ” in turn, improved profitability, together with capitalizations, strengthen the solvency of the system. just as reserves play the role of liquidity insurance to the monetary authority, banks ’ cash is the first defense line against unexpected events. for this reason, banking regulations fostered the recovery of liquidity, equivalent to almost 40 percent of total deposits, one of soundest of the region. we should not forget about the growing dynamism of banks in getting