further enhance the offerings of islamic banks. the iap provides an online marketplace to match potential investors with viable ventures. islamic banking assets have also grown beyond the targeted 20 % as originally intended in bank negara malaysia ’ s financial sector masterplan. it now stands at more than a quarter ( 27 % ) of the total banking system. islamic finance also provides financing to all segments of society irrespective of beliefs, race and gender. there is also greater acceptance of takaful with its increased penetration rate to 14. 8 % of the population. for over 3 decades, islamic finance has grown and developed and contributed significantly to the development of the real economy. secondly, enhanced integration with the global market has enabled greater trade and financial linkages. malaysia is now positioned at the forefront of international developments with increasing connectivity between financial centres, and more cross - border islamic financial transactions. our sukuk market constitutes more than 50 % of global sukuk outstanding for the past 16 years. malaysia as an international islamic finance marketplace offers an attractive and facilitative platform for foreign issuers to tap our domestic sukuk market. there have been bis central bankers ’ speeches various issuances of multicurrency sukuk in us dollar, singapore dollar, chinese renminbi and japanese yen. there are also stronger bilateral ties with various countries such as the united kingdom, hong kong, turkey, indonesia and japan. these interlinkages open up greater opportunities to introduce and strategically position islamic finance services globally while providing opportunities for meaningful participation of our local players as lead arrangers for some of the global sukuk issuances. the gains are also extended to our ancillary service providers that were able to establish greater connections with the international market. thirdly, malaysia's pioneering initiatives and thought leadership in islamic finance has enabled the country to advance innovation in the islamic finance industry. on the regulatory front, the modernisation of the regulatory framework through the islamic financial services act 2013 ( ifsa ) provides an opportunity and space for islamic financial institutions to offer new products and services. the launch that we are witnessing today is a major initiative, the development of a shariah standard that is integrated with details on operational requirements. this approach ensures a transparent basis of shariah rulings by the sac, and provides a convergent in understanding between shariah scholars and industry practitioners. in judiciary matters, where the sac serves as a reference point in analysing muamalat

this leads me to my next point – the importance of other supporting infrastructure. other supporting infrastructure for risk management and supervision to be effective and efficient, it is not sufficient to just have a sound capital framework. the second element of the committee ’ s strategy is to get the basic supporting infrastructure in place. the development of the core principles for effective banking supervision, the committee ’ s liaison with international accounting bodies, and the committee ’ s work on cross - sectoral bodies such as the joint forum are examples of our efforts to promote the fundamental infrastructure needed for a sound banking system and for effective supervision. building the foundations for effective supervision and promoting the prudence and integrity of financial accounts are an integral part of the committee ’ s current work. a sound system of accounting and provisioning underpins the integrity of risk measures, capital adequacy and meaningful market discipline. moreover, as many of you here would know too well, it is not enough to just focus our attention on the implications of our policies for banks as the traditional lines between the various financial sectors become less clear. it is therefore important to understand the implications of market developments and supervisory changes on non - bank financial institutions and financial markets more generally. supervision is not all about sophisticated modelling approaches. rather it is about understanding the risks that a bank faces and promoting better management of those risks. used appropriately, advanced modelling approaches can help a bank to refine and sharpen its ability to measure, monitor and control risk. used inappropriately however, and without an understanding of the limitations and assumptions built into such models, the costs may be greater than the benefits. in this respect, i view the infrastructure supporting the capital foundation as vitally important. an initiative that the committee will begin work on is the so - called “ definition of capital ”. over the past decade we have witnessed significant advances in the way banks manage their economic capital, as well as the development of new and innovative capital instruments. the definition of capital topic highlights the importance of the supporting legal and accounting infrastructure, and the need to understand market dynamics within and across jurisdictions. at this stage, the committee ’ s work in this area will focus on a stocktaking of the issues. proportionate policy and flexible frameworks the third element of the committee ’ s strategy is to promote proportionate policy responses, and to develop flexible policy frameworks. the committee promotes a range of supervisory methods and advocates proportionality in supervisory approaches. the supervisory tools may include better regulation, supervisory guidance, or