left. the exchange rate went through the roof, interest rates went beyond one hundred percent, and the banking system collapsed leaving economic stagnation and unemployment in its wake. what ’ s worse, the mexican crisis carried contagion effects and all latin american economies began to experience capital flight and its repercussions. i think that this was the first clear evidence of the risks of globalization and the need to rethink the policies of the international financial agencies. of course, after the mexican crisis, came the asian crisis in 1997 / 1998 raising new questions about globalization and imf policies in emerging markets. here was another case of widely recognized success stories ( the east asian miracle, you remember ) that suddenly went sour. in a way the asian crisis undermined the mystique and the self - confidence of the imf and world bank as even they began to second - guess themselves. by this time, of course, developing countries, the ngo ’ s and all the critics that always had concerns about globalization and the “ washington consensus ” felt that they were vindicated : that globalization and the imf policies were responsible for increasing poverty and the widening of the gap between rich and poor. the massive protest at the wto meeting in seattle brought it all to a head and began an intensive process of soul searching among all the institutions. professor joseph stiglitz, the 2001 nobel prize winner in economics and former chief economist of the world bank, and chief critic of the imf is a strong supporter of “ globalization ”, which he sees as a positive force that must be harnessed. he, however, also holds the view that the failure of “ the washington consensus ” contributed to increasing poverty in many developing countries and caused financial crises in emerging market economies. he cites the imf ’ s biggest sin as its “ market fundamentalism ”. in his view, the imf became too obsessed by a belief in the perfection of markets and the imperfection of governments. he also believed that the washington consensus put far too much emphasis on fighting inflation or ensuring that western banks got repaid, “ without showing feelings for the people whose lives were affected by policies ”. of course, the imf has a different spin on what prompted reform. the fund admits that it made some mistakes of judgement but insisted that it had nothing to do with the model, and that certainly, it was not a case of uncaring bureaucrats serving the narrow interests of the western financial community. the fund would con

investment in research and development and hence promote innovation, the development of the pool of talent, and the greater use of technology in islamic finance. islamic finance as an emerging form of financial intermediation would require tremendous investment in research and development to promote innovation. of importance is to develop a broader range of islamic financial market instruments that include instruments with equity ownership features, islamic asset - backed securities, inclusion of permissible forms of credit enhancements as well as shariah - compliant risk mitigating instruments. the development of an islamic derivatives market for hedging is required for market - making activities to support the development of secondary markets. malaysia has recently established a shariah scholar's fund to fund such research and development efforts. the fund also aims to promote greater engagement among the international shariah scholars and thus provide a platform for deliberation on the shariah compatibility of newly developed islamic financial instruments and markets. as islamic finance continues its robust international expansion, an adequate supply of talent and expertise is vital to support the growth. while shortages in talent are now being felt, this is being addressed on several fronts. to develop the expertise to meet the increasing manpower requirements of islamic finance, malaysia has in 2006 established the international centre for education in islamic finance ( inceif ). it is envisioned that inceif acts as a professional certification body and education institute for post - graduates in islamic finance. reinforcing this is the international centre for leadership in finance ( iclif ) in malaysia that provides for leadership and management programmes for the financial services sector including for islamic finance. as islamic finance forges ahead, successful islamic financial institutions will be those that have the scale and are able to exploit the full potential and opportunities that arise from the advances in information technology ( it ). in embracing new leading edge technology, the potential for the islamic financial industry to provide new products and services will be enhanced. it also represents the potential to increase access through a wider range of new delivery channels, including enhancing efficiency while reducing costs for consumers and businesses. it needs to be leveraged on in making strategic decisions in the alignment of the business, in elevating the institutional capacity and operational efficiency and strengthening risk management capabilities. despite the more challenging and dynamic environment we have seen, islamic finance has continued to emerge as a vibrant and resilient form of financial intermediation that is increasingly being embraced on a global scale to become an integral part of the international financial system. in the process of its