important for the institutions to spread the risks by having prudent asset allocation based on different islamic contracts so as to ensure a sustainable revenue stream and to ensure the institutions are in a position to absorb the extreme circumstances that occur during a crisis. in the case of malaysia, an additional capital requirement is required to cushion inventory risks of underlying assets and to cover the potential equity position risks that are embedded within the partnership contracts. this is also reinforced by the requirement on the appointment of board representatives in the invested entities under the partnership contracts so as to serve as a safeguard for the interest of the islamic financial institution thereby allowing for continuous monitoring and surveillance. islamic financial institutions are also allowed to transfer the risk to investment account holders under mudharabah, i. e. profit sharing and loss bearing contract, if the institution can demonstrate the appropriate disclosure and governance practices that would ensure an effective risk transfer. islamic banks are also permitted to set aside a portion of income derived from assets funded by mudharabah contracts, in the form of profit equalization reserves ( per ) to sustain stable and competitive returns. several of these requirements are based on the international standards that have been issued by ifsb. the implementation of ifsb standards across jurisdictions will be key in the continued robust expansion of islamic finance. while the above measures facilitate the managing of risks peculiar to islamic finance, the legal, regulatory and supervisory infrastructure also needs to keep abreast with the evolution and rapid transformation taking place in the industry. as part of this infrastructure, there needs to be an integrated crisis management framework to ensure that any emerging crisis in the islamic financial system will be promptly managed. such efforts, among others need to involve three basic aspects. this includes having the mechanism and vehicle to preserve short - term liquidity, to remove troubled assets from the balance sheets of financial institutions and to recapitalise islamic financial institutions. in the case of malaysia, this infrastructure has been put in place. the central bank has a range of islamic financial instruments to manage liquidity in the financial system. this is supported by a well developed islamic money market. in addition, the financial safety net framework in malaysia encompasses the lender of last resort facility and a comprehensive deposit insurance system that provides coverage for both conventional and islamic deposits. the deposit insurance corporation has also been given sufficient statutory powers to ensure a prompt, effective and least cost resolution to safeguard the stability of the islamic financial system. this entails among others, the regulatory powers and mandate to ensure expedient resolution of

current account deficit. foreign direct investment inflow to our country for the same period was in record levels with 21. 4 billion usd per annum. what is worth paying attention here is the lack of an interruption in the foreign direct investments flowing in our country even during the fluctuations experienced in the may - june period. this is an indicator of the improvements recorded in the macroeconomic stability and also the confidence for the future of our economy by the foreign investors. long - term capital inflows and foreign direct investments finance a vast amount of our current account deficit currently. this financing structure is expected to continue parallel to the implementation of the current program decisively. while analyzing the sustainability of the high current account deficits in our country, it should be noted that the structure of our economy is different from the past. in this context, strengthening of the macroeconomic foundations in the turkish economy and the gradually increasing financial integration with the world economy facilitates the sustainability of higher current account deficits. floating rate regime and a strong financial system also alleviates the negative consequences of the current account deficit during a possible capital outflow. the current account deficit is one of the risk factors for our economy today as it was in the past. management of this risk like the other risks besides its control through medium and long - term structural measures considering its structural peculiarities are vital for the establishment of a permanent stability in the economy. finally, i would like to express my pleasure one more time for having this opportunity to communicate my views about the policies of the bank and the macroeconomic developments. thank you.