##ntial and accounting standards. while the latter has included the borrowers, investors and institutions that participate in the process. sovereigns, corporations and multinational and multilateral entities have accessed the international markets while the institutions and investors have been a source of financing. indeed, these funds are either raised directly from international banking institutions or through bonds and equity issues in international markets. it has not only expanded the investor base, but reduced the cost of capital and enhanced its liquidity. by operating beyond their domestic borders, financial institutions also provide their services from different geographical locations. there has also been greater use of international financial institutions by corporations, households and funds to increase their ability to diversify their risks. investments in the domestic economies have also been financed by foreign capital. international firms have also participated in local markets through islamic based financial structures. with increased liberalization, there is also increased foreign presence in terms of foreign entry into the domestic financial system. this is an area where malaysia is taking a step forward during the course of this year. the globalisation process has also taken place in terms of participation by firms in international capital markets through cross listings. my remarks today will focus on the strategies on the approach to accelerate the transition of islamic finance towards being an integral part of the international financial system in terms of both the international financial architecture of the islamic financial system and the development of a comprehensive domestic financial infrastructure. the establishment of the islamic financial services board ( ifsb ) has been an important initiative in the development of the international islamic financial architecture. it has been established to promulgate the international regulatory and supervisory standards for islamic financial institutions aimed at achieving best practices and to secure soundness and financial stability in islamic finance. in this regard, the ifsb has already made progress in developing the prudential standards on the capital adequacy and risk management framework, and has commenced work on developing standards on corporate governance. appropriate accounting standards have also been put in place to reflect the true and fair value of banking operations that would lead to greater accountability and responsibility on the part of financial institutions. while the accounting and auditing organisation for islamic financial institutions ( aaoifi ) has made a significant contribution in formulating and issuing accounting and auditing standards for islamic financial institutions, efforts need to be intensified to promote of the adoption of these standards. the international islamic financial market ( iifm ) further provides the environment that will encourage active participation by both islamic and non - islamic financial institutions in the secondary market for islamic financial instruments.

zeti akhtar aziz : towards creating an islamic financial system as an integral part of the international financial system - strategies and challenges speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the asian islamic banking & finance summit, kuala lumpur, 21 september 2004. * * * “ the integration of islamic finance with international financial markets and institutions has demonstrated its viability, competitiveness, resilience and sustainability as a form of financial intermediation. this trend has contributed towards facilitating greater cross border flows in terms of increased trade and investment transactions thereby strengthening the global economic and financial linkages. as this international integration process intensifies, it not only raises the prospects for more balanced global growth but also allows for greater diversification of risks thus contributing towards greater global stability. at the core of this financial globalisation process is the robustness and resilience of the domestic islamic financial system. the development of a sustainable islamic financial system that is able to withstand the challenges of the uncertainties and instabilities inherent in the global financial system, thus not only requires an effective global financial architecture but a system that is also supported by an appropriate, comprehensive and sound domestic financial infrastructure. these mutually reinforcing structures would not only accentuate wealth creation and foster greater potential for trade but would also promote global financial stability and breakthroughs in new business relationships ”. distinguished guests, it is my honour to be invited to address this distinguished audience at this ‘ asian islamic banking & finance summit - developing a comprehensive islamic financial system ’, organised by the euromoney seminars for the asian region. while the overall development of islamic banking and finance for more than three decades has been evolutionary, the pace has intensified in recent years. islamic financial concepts have been incorporated into many financial products to meet the changing needs of consumers, businesses and investors. new islamic financial institutions are being established ranging from the traditional banking institutions to more specialised financial institutions. this islamic financial landscape has been supported by a well - developed regulatory, prudential, legal, accounting, framework and reinforced by the necessary research and development. initiatives to promote greater awareness and education amongst muslims and non - muslims have also been intensified. in this recent decade, we have seen the financial globalisation of islamic finance with the participation of both the authorities and the private sector. in the case of the former, attention has been given to developing the financial infrastructure, including the financial markets, institutions and agencies as well as establishing the necessary prude