in understanding the islamic financial transactions. another importance aspect is the person ’ s qualifications and experience in issuing fatwas relating to financial transactions. the fit and proper criterion determined by sbp allows for inclusion of all school of thoughts and also includes scholars that have experience and qualification of international level. these shariah scholars are chosen by the banks, approved by sbp and appointed by the banks to over see their islamic banking operations. therefore they serve as sbp ’ s eyes and ears at the operational level of islamic banking operations in the country. the second element is shariah compliance inspection. the inspection manual, which is very comprehensive, was compiled by ernst & young out of bahrain in collaboration with their affiliate in pakistan. the shariah compliance inspection is needed to ensure that specific terms of islamic contracts, fatwa on the transaction, as well as the sequence of execution of the agreement are accounting and auditing organization for islamic financial institutions, headquartered in bahrain. its shariah board consists of 14 shariah scholars across the world. table is attached as annexure conducted according to shariah principles. we are in the initial stages of rolling out islamic accounting based on aaoifi standards and the inspection is geared towards auditing the transactions according to these standards. next year in addition to the normal sbp inspection, all banks conducting islamic banking will also have to undergo the shariah compliance inspection. the third element of our shariah compliance supervision is the all important shariah board. we have instituted a shariah board 4 at sbp. one of the unique features of the shariah board is the composition of its membership ; because the board includes not only shariah scholars, but also a chartered accountant, lawyer, and central banker. we believe that shariah is the pivot around which islamic banking revolves but in addition there are other disciplines that are critical to the success of executing the shariah standards. as such we believe that all such critical disciplines must be represented within the shariah board so that the rulings emerging out of the shariah board are not only 100 % shariah compliant but these are also compatible with the legal and financial infrastructure available to the islamic banks. the board is responsible to give ruling on any conflicts arising out of the shariah compliance inspection. it is responsible to provide guidelines to sbp for shariah aspects of regulations. it helps in product development and provides support for approving any new products developed

case of the emerge of a need to issue liquidity bills, information on auctions will be announced at reuters ’ “ cbtl ” page at 10 : 00 one working day prior to the auction rather than on the same day, to provide investors a longer time for evaluation. information on auctions will continue to be announced to banks and financial intermediaries by electronic fund transfer ( eft ) system. liquidity bill auctions will be held at 11 : 00 with the value date of the following working day, and the results will be announced until 11 : 30 at reuters ’ “ cbtm ” page. auctions will be held by the traditional method. x ) information on new turkish lira deposit buying auctions will be announced at reuters ’ “ cbty ” page ; while information on reverse repo auctions will be announced at “ cbtf ” page at 10 : 00 on the same day. in case of an accelerated credit expansion in the banking system in such an extent that would create inflationary pressure despite the active use of the said open market operations to drain the excess liquidity in the market, required reserves may also be used effectively to support liquidity management. the central bank, the primary goal of which, entrusted to it by law, is to achieve and maintain price stability, will continue its practices to enhance the effectiveness of the monetary policy and liquidity management, also in 2008. accordingly, the central bank may change not only its liquidity management strategy, but also the borrowing and lending interest rate margins in cases of unpredictable changes in market conditions and emergence of needs that may arise. as always pointed out, the central bank deems the stability and development of financial markets as a supportive objective for the efficient implementation of the policies pertaining to price stability. obviously, under the floating exchange rate regime, the central bank is able to implement the ytl liquidity policy in a more flexible manner than it can under a fixed currency peg regime and can act more promptly and flexibly to meet the ytl liquidity needs of the banking system. also, the central bank can prevent excessive fluctuations in money market interest rates as long as they are consistent with the inflation target. furthermore, the central bank provides the banking system with foreign exchange liquidity via short - term foreign exchange deposit auctions, albeit at limited amounts. however, it is worth mentioning once more that the banking system should not slacken risk management principles by simply relying on the more flexible and effective new turkish lira liquidity management