project while conventional banks tend to rely more on collaterals. this is one of the features of islamic banking that could be of tremendous assistance to small - scale businesses. conventional banking requires comprehensive criteria that need to be satisfied for an applicant to become eligible for loans. smallscale enterprises throughout the world generally face greater difficulties in obtaining finance than large - scale enterprises do. the services sector is made up of a large number of small entrepreneurs who usually do not have ready access to finance. it is a matter of fact that small entrepreneurs who were able to obtain credit facilities on the basis of collateral in the past are now finding it difficult to raise funds for their operations. with the implementation of basel ii in the years ahead, there does exist a potential risk that conventional banks would be less inclined to lend to small - scale enterprises. given the characteristics of islamic banking, the small and medium enterprises is an economic sector where islamic banking could play a central role in giving a fillip to entrepreneurship. in short, islamic banks can play a catalytic role in fostering economic development although it has been observed that, in practice, islamic banks tend to favour short - term projects and trade finance which are less risky. this is principally due to a lack of adequate techniques for project appraisals in an islamic banking 4 context. because of these weaknesses, it is advisable to address the need for having staff with the required skills to learn the new processes for operating islamic banks. the provision of islamic financial products and services has expanded beyond the market for households, businesses and institutions to governments. they have made inroads into capital markets. the sukuk bonds – which differ from ordinary bonds to the extent that they are shariahcompliant – have gained prominence. the market for sukuk bonds is expected to register rapid growth in the years ahead as more and more conventional financial institutions are expressing keen interests and are actually participating in it. the expansion of islamic banking across the world has inevitably drawn the attention of central bankers and regulators in the middle east and elsewhere to the risk factor associated with it. like conventional banks, islamic banks also need to be effectively regulated and supervised. their strength and soundness are unequivocally as critical as for conventional banks. however, the nature of risks associated with islamic banking business brings forward an array of issues in risk measurement, income recognition, adequacy of collateral and disclosure standards. effective prudential supervision for islamic banks the world over is still in

mauritian society. this is history. if history is not a language in which the dead speak to the deaf, we have to learn the lesson that the recipe for growth does not rest on a single monetary policy tool, but on a comprehensive set of bold reforms and other associated policy initiatives. society has to own them. is there progress without sacrifice where everyone is a winner? there is no such thing. truths need to be told bluntly, without prevaricating and without obfuscation, as otherwise people tend to delude themselves into believing that nothing fundamental needs to change if the future economic performance is to match the past. we need to re - create the kind of business climate i just outlined. we need coherence. we need stronger commitment. we need to fully comprehend the dynamics of a digitally - driven world of technology – a phenomenon that we cannot at all afford to take lightly. it ’ s not a world of cows and cattle ; it ’ s a world of cybernetics and robotics. we 3 / 7 bis central bankers'speeches need to drop 20th century instincts and develop 21st century instincts. the context is riddled with complexities. in a world that is out of order, a world that is pulling apart, the scale and scope of challenges are far wider, deeper and tougher than they were in the 1980s. absent a strong dash of commonsense, society as a whole is bound to bear the brunt of painful adjustments in the future. most of the economic policies that support robust economic growth in the long run fall outside the province of the central bank. if we really want to have sustained good growth back, we can only do it through exports of goods and services. in a very resource scarce country like ours, aggregate income levels can meaningfully rise only if exports of goods and services go up. this is a story that has only one simple conclusion : we have to be, first and foremost, competitive. it ’ s a conclusion that, despite overwhelming evidence, many of us conveniently put a lid on, perhaps because human beings cannot digest too much of reality in a single shot. when everybody in a society ends up believing that everybody can live at the expense of everybody else, something terrible happens to the national character. free riders multiply ; they off - load individual responsibilities. the gradual shift from a belief in individual responsibility to a belief in which the emphasis is more on social responsibility, whatever that means, is deplorable. there