financial stability in islamic financial system. the ifsf would also be a platform for the islamic financial system to interface with the conventional system via the financial stability board to facilitate the common objective of achieving global financial stability. to enhance the efficiency of the islamic financial institutions, a solution is currently being developed to facilitate liquidity management at both national and international level. a liquidity management task force was established by the ifsb and the idb to develop this solution. this task force is expected to make key announcements later this year to facilitate cross border liquidity flows for efficient resource utilisation by islamic financial institutions. islamic finance has come a long way and is set to continue its trajectory upwards and onwards. an important aspect of the recent developments to strengthen islamic financial services industry is that this is being undertaken during the stable and good times. this will position islamic finance to deal with future challenges. a clear indication of that is the growing relevance and importance of the sukuk market. this event in kuala lumpur is commemorating the talent, expertise and the successes of the islamic financial community.

it is also worth noting that other australian industries have been very profitable over this period. if we adjust for the unusually low bad debts of recent years, the profitability of australian banks falls back to around the middle of the international range. overall, when we look at all the evidence, we think it is reasonable to conclude that the australian financial sector is competitive, and that its performance measures up quite well across a range of international benchmarks. some commentators have recently been concerned that the financial turmoil of the past year has lessened the degree of competition. this is because the turmoil has made it harder for lenders who fund themselves in capital markets to compete. some have argued that this requires some type of government intervention in the market, such as setting up a government guaranteed securitisation vehicle. while it is true that lenders relying on securitisation have lost market share in recent months, it has always been the case that some phases of the economic cycle favour some forms of financing more than others. securitisation had been strongly favoured over the previous five years of very low global interest rates ; now it is at a disadvantage. our view of recent events is that they are cyclical in nature rather than a permanent change to the structure of the market, in the sense that when market conditions settle, securitisation will pick up again. as such, it would be premature at this stage to embark on proposals such as the setting up of new government bodies to support certain forms of financial activity. the best way for the government to promote a competitive financial sector in the long run is to ensure : • first, that regulations do not unreasonably impede new entrants ( since history shows that it is new entrants that drive competitive behaviour ) ; • second, that users of financial services have good access to information about the range and cost of services available. it is also important that this information be in a form that is easy to understand ; and • third, that switching between service providers be as costless and easy as possible. i will end my opening remarks here, and phil and i would be very pleased to answer any questions you may have. thank you.