an important role in the harmonisation of prudential standards, in addition to contributing towards the consistent development of islamic finance across different jurisdictions. several parts of the world, including malaysia, have implemented the prudential standards issued by the ifsb. these prudential standards which have been designed to take into account the unique features specific to islamic finance will contribute towards ensuring its soundness and stability. british financial regulators are therefore encouraged to be members of the ifsb. early this year, the ifsb in collaboration with the islamic development bank ( idb ) established a task force on islamic finance and global financial stability. the task force is responsible to examine the resilience of islamic finance in the current challenging global financial environment and to examine further the building blocks that need to be put in place to develop the international financial architecture to strengthen further the resilience of islamic finance. the task force will provide recommendations including on developing the framework for prevention and management of crisis taking into account the lessons for reform of the international financial system. thirdly, and importantly is that international integration of islamic finance would be facilitated by the mutual recognition of financial standards and products across jurisdictions. in the area of shariah, there has already been the progressive convergence of shariah views and rulings, and the mutual recognition of financial standards and products across jurisdictions. as this continues to occur, it would be a major driver towards greater international financial integration. this convergence and harmonisation is taking place with the greater engagement among the regulators, practitioners and scholars in islamic finance across jurisdictions. to promote greater mutual recognition of products, bank negara malaysia has embarked on the initiative to develop the shariah parameters to promote more consistent application of islamic financial contracts. this initiative aims to determine the essential features of islamic financial products derived from underlying key shariah principles. this is also to provide greater clarity to the international community thereby facilitating greater cross border transactions. an international shariah research academy for islamic finance ( isra ) has also been established in 2008 to promote greater engagement among shariah scholars from around the world and to undertake research activities and contribute towards a greater understanding and international convergence. in this respect, we welcome relevant british institutions to collaborate with i sra to advance this endeavour. development of human capital in islamic finance is also important to ensure an adequate supply of talent pool of experts and high calibre professionals. the investment in human capital development is therefore crucial to support the global development of islamic financial services industry.

finance. a tax neutrality policy was introduced for islamic financial instruments and transactions which has benefited our players, consumers and the development of islamic finance as a whole. the policy, which was later emulated by many countries around the world, ensures neutrality to tax treatment between islamic and conventional financial products and services, a move which enhances the attractiveness of islamic financial products as competitive alternative to conventional banking. the most recent development of malaysia ’ s legal infrastructure for islamic finance was the enactment of the central bank of malaysia act 2009. our central bank of malaysia act accords formal recognition to the dual financial system practised in malaysia and our mandate to develop malaysia as an international financial centre. the act formally recognizes the sac as being the highest authority on shariah issues related to islamic finance transactions, and the role of the sac as a consultative body to the malaysian judiciary system. most critically, sac ’ s rulings are binding on the courts and arbitrators. this referral system preserves the sanctity of shariah rulings and the consistency in the interpretation and application of shariah principles for islamic finance transactions in malaysia. for adjudication purposes, a dedicated judge in the commercial division of the high court has been assigned to preside over litigated cases on matters relating to islamic finance. specific arbitration rules for islamic banking and financial services have also been enacted to compliment the court system and enable disputes relating to islamic finance to be dealt by the kuala lumpur regional centre for arbitration. this infrastructure is unique to malaysia and reflects the support and cooperation from the legal fraternity to keep up with the development of islamic finance. importantly, a supportive judicial system helps create an environment where players and consumers are able to execute financial transactions efficiently, with sufficient certainty and enforceability. in recent times, we have witnessed a number of legal disputes involving islamic financial transactions that have been brought to the common law courts for settlement. these recent cases tried in the english courts have highlighted the hesitancy on the part of the common law judges to deliberate on issues concerning shariah principles in islamic finance transactions. this is quite understandable given the lack of expertise on the matter. while evidence on shariah matters can be admitted from subject matter experts but such evidence or advice is not binding. the scenario in malaysia is different. we have a dedicated high court for islamic finance related cases and our judges shall refer to the sac for questions or rulings relating to the shariah and these rulings are binding. malaysian courts