. while it has been over four decades since the creation of the first islamic bank, islamic banking itself has not grown in large part because of legal constraints. the al - amanah charter created the bank but not a framework for islamic banking per se. no such enabling law has so far been passed. in fact, the general banking law of 2000 defines islamic bank as specifically pertaining to al - amanah bank only. the gbl does not provide for the creation of other islamic banks. if we are to create a truly responsive system of islamic banks, from a bsp standpoint, certain principles will be important. first, the system must allow for a critical mass of market players under a competitive but well regulated environment. the public must be provided with appropriate choices to suit their risk appetite and financial needs. second, appropriate linkages, including inter - bank markets that cater to the unique characteristics of islamic banking, must be present. third, the regulatory and supervisory framework must encourage a level playing field where the islamic banking system can operate alongside conventional banking. there must be a coherent, consistent and comprehensive set of regulations and standards that would appropriately apply to all banks. in other words, the privileges that are available for conventional banks must also be available to islamic banks. in the same vein, the prudential requirements that cover conventional banks, must also apply to islamic banks. the design and implementation of standards, of course, would need to take into account, the particular characteristics of islamic finance. fourth, the regulatory environment must encourage the provision of innovative products and services to address the distinctive needs of islamic finance. islamic financial players should be encouraged and not inhibited from introducing islamic finance products. the regulatory framework could consider the substance [ more than the form ] of the islamic products, assess the economic risks involved and use that assessment as basis for regulation. to support this approach, the system must allow for the development of a pool of experts on islamic finance. bis central bankers ’ speeches fifth, the regulatory framework must help build a broader customer and asset base by increasing investor awareness and acceptance, while ensuring consumer protection. while the bsp would like to promote an increase in the number of islamic banks that operate alongside conventional banks, the bsp is also looking at an “ open approach ” whereby conventional banks can operate islamic banking windows, if they so desire, as long as the principles outlined just now are followed. fortunately, there is growing literature on how these principles can be realized. we can learn from the research

among others, to those who are more vulnerable, even if it means accruing less to the bottom - line. this is the very essence of why banking is imbued with public interest. in this connection, the bangko sentral is preparing to release a consumer protection framework ( cpf ) that is applicable to its covered institutions. built upon the pillars of consumer empowerment, market conduct and collective responsibility, the governance standards put into practice by each bsp - covered institution will play a central role within the cpf. the introduction of the cpf is a milestone for us. consumer protection is now part of the core practices for which the bsp exercises supervision and regulation. in this initiative, i expect that baiphil will again be one of our key partners. what lies ahead : a challenge to baiphil ladies and gentlemen, we can always talk of governance at length. the challenge, however, is not in extolling the virtues of good corporate governance. rather, it is what happens after that is the key challenge. if a “ culture of good governance ” is meant to define our set of values, beliefs and practices on governance, then we are clearly along the proper path. this cannot be delineating the shades of grey between “ acceptable ” and “ unacceptable ”. when it involves the interests of several stakeholders, we need to be categorical about what is “ right ” and “ wrong ”. the challenge is measuring how far we moved forward. i am not referring to specific instances of compliance or breaches. what we want to achieve is having that comfort that values, beliefs and practices are fully in place and updated even when no one is looking. certainly, it is this last part that is at the core of the issue. baiphil has always been the advocate of training and capacity building. the industry benefits from your course offerings and capacity building programs. but baiphil ’ s mandate cannot and should not stop when the courses end or when we choose to mount a new training. is baiphil up to this critical task? abangan! actually, given your track record, i trust that baiphil will find new and creative solutions to meet these challenges. finally, i thank and commend baiphil for its continuing commitment to support the bangko sentral ’ s financial education program for parents and teachers in our public schools. this is a parallel program that complements the lessons on saving, money management and entrepreneurship being taught in