shari ’ ah - compliant investment funds. every tool of the islamic banking has its own contractual nature and features, which differ from other tools in terms of risks, guarantees and pricing. islamic banking services have not been confined to the activities mentioned earlier, but the scope of their transactions has been extended to include other services such as : providing joint finance, issuing banking bonds and opening letters of credit. islamic institutions and banks provide a variety of finance and insurance methods for enterprises, management of financial portfolios, and tawarruq assets ( assets securitization ). moreover, islamic institutions and banks have played an effective role in supporting economic reforms and privatization programs in countries where they work by purchasing shares in listed companies and financing some private activities, thereby helping in supporting the basic infrastructure and financing of housing projects for low and middle income people. they have also contributed to supporting small and craft projects, and indirectly helped in creating many job opportunities for citizens. ladies and gentlemen, the achievements of the islamic banking industry over the last three decades have necessitated the establishment of relevant institutions that support islamic banking such as : the accounting and auditing organization for islamic institutions ( aaoifi ) and the islamic financial services board ( ifsb ). all these organizations aim at creating a sound environment for collaboration and communication among islamic banks and financial institutions by introducing and applying international standards to improve the islamic banking industry and ensure its soundness. let me briefly talk about the necessary requirements to ensure the sustainability, stability and soundness of islamic banking. the islamic financial services board ( ifsb ) plays an effective role in abiding by supervisory requirements for sustainability through issuing supervisory and control standards for the islamic banking system, based on the best supervisory practices in line with basel ii standards, focused on : capital adequacy, risk management, internal control, institutions management controls, transparency and market discipline. the ifsb has urged the islamic institutions to follow specified procedures for assessing their capital adequacy in terms of the nature of risks and pursue strategies to maintain their capital at required levels. it has also required supervisors to review and assess internal assessment measures of these institutions ’ capital adequacy and ensure their compliance with the required capital level and take supervisory measures in case of non - compliance. in addition, the board has urged supervisory authorities to take prudential measures to prevent the decrease of capital to lower than minimum level, and stipulate quick correcting measures in case of such a decrease. stress tests are considered one

alan bollard : after the national bank acquisition - living with big australian banks an excerpt of an address by dr alan bollard, governor of the reserve bank of new zealand, to the australasian institute of banking and finance, auckland, 6 november 2003. * * * having a banking industry consisting mainly of banks with australian parentage has many advantages for us. despite our country ’ s small size, our banking system benefits from the presence of strong, innovative, internationally - connected players that are from a highly - respected country and understand our preferred ways of banking. of course, from time to time one hears complaints about “ branch office ” treatment of new zealand borrowers, but overall on a day - to - day basis banks ’ customers in new zealand do well out of the deal. meantime, the reserve bank ’ s main concern remains to regulate for the promotion of a sound and efficient new zealand financial system, regardless of the fact of its australian parentage. the conditions we put on anz ’ s acquisition of the national bank do not signal any radical new approach to banking regulation. however, they do represent ongoing enhancements that we are very serious about and have been working on for some time. these are aimed at ensuring that local boards have effective operational reach over core assets and people, and that lines of responsibility and accountability are clear. we have been able to effect these conditions due to the new powers put in place by the rbnz amendment act in august, and they provide an indication of the direction of our generic policy thinking on these matters. the reserve bank ’ s conditions associated with the acquisition were in four main areas. first, any transfers or outsourcing of the national bank ’ s core banking functionality, including by way of an operational merger, will require the reserve bank ’ s further consent. core functionality includes all management, operational capacity and systems necessary to operate the bank on a standalone basis in the event of failure of an outsourcing provider, including a parent bank. the intent of this requirement is to ensure that any outsourcing does not undermine the legal authority and practical ability of the directors or statutory manager of the national bank to run the bank on a standalone basis if the need should arise. this doesn ’ t necessarily mean that the core functionality must be in new zealand - it means that legal and practical access to it in a crisis must be unimpeded. the second area where we imposed conditions of consent strengthens the first. we require that the