erkki liikanen : a tribute to stanley fischer a tribute to mr stanley fischer, vice chair of the board of governors of the federal reserve system, by mr erkki liikanen, governor of the bank of finland, 13 october 2017. * * * stanley fischer is leaving the fed today. not very many people excel during their careers as both academics and practitioners at the very highest level. stanley fischer is an outstanding example of those rare people : a first - rank researcher and teacher, who is also one of the world ’ s most influential policy - makers, a man who has led some of the most important policy institutions on earth. stan fischer ’ s experience and achievements are such that they defy all attempts to summarize them. larry summers was right to write that stan ’ s departure is the end of an era. on a personal level, i appreciate our many encounters and our continuing friendship. it is actually remarkable how many contacts stan has had with my home country, finland, and finnish economists. i will mention just four of them. the first goes back to the 1970 ’ s. stan had just published the famous macroeconomics textbook he wrote together with rudi dornbusch. soon after that, stan spent twice two weeks in finland, together with dornbusch, teaching the graduate course organized by the yrjo jahnsson foundation. these courses were invaluable for the growth of the economics profession in finland, and dominated graduate education in the country for a decade. as the lead instructors of the 1979 course, stan and rudi dornbusch made a durable contribution to the development of the burgeoning economics profession in finland. the second is linked to his role as a thesis advisor. as we know, stan is famous for having been the thesis advisor or teacher of many of the giants of the economic profession. ben bernanke, larry summers, olivier blanchard and others come to mind. for us finns but for others, too, the late pentti kouri is a particularly evocative name : a brilliant finnish economist who during his short academic career made a big impression in the field of international monetary economics. pentti kouri hailed from lapland. his career as a researcher was like the lapland summer : bright, but did not last long. stanley fischer was pentti ’ s thesis supervisor at the mit. stan told me about pentti : “ he came almost every day after 4 o ’ clock to talk

##ocation of licence, in cases, where a violation by the institution poses reputational risk that might cause an erosion of confidence and could threaten the systemic stability of the islamic financial system. the integrity and credibility of shariah governance framework in malaysia is also fundamentally supported by the role of the bank ’ s shariah advisory council ( sac ), a centralized referral body for islamic finance community, which is statutorily positioned as the highest authority in the determination of shariah matters relating to islamic finance. in preserving the sanctity of the shariah, the sac itself ensures the robustness of its rulings through a rigorous process before arriving at a decision. another essential element in developing an effective legal infrastructure is the role of an adjudication system. a supportive adjudication system in the context of islamic finance is one which can authoritatively enforce the principles of shariah in dispute settlements involving islamic financial transactions. an efficient and authoritative adjudication system helps create certainty and establishes the legitimacy of islamic financial contracts. islam places great importance on contracts and on parties to a contract. the ability of parties to enforce a contract is thus critical as it constitutes the core of maintaining the confidence of the public at large. therefore, there is a crucial need for a dispute settlement mechanism that is able and competent to dissect in a judicious manner shariah matters in contracts, so that issues of dispute in shariah interpretation could be resolved and enforced accordingly. whilst it is neither practical nor desirable to change the entire court system, a potential solution is to create a special islamic bench that deals with financial transactions undertaken in accordance with the shariah. this could be a viable option particularly for muslim majority countries, as is the case in malaysia. the use of market discipline is another option to ensure the sanctity of shariah via mandating sufficient check and balance in adherence to shariah matters including a minimum disclosure requirement, certification by the shariah committee or an external audit done on the shariah compliance aspects of an institution ’ s operations. in malaysia, we have taken the approach in ensuring that the sanctity of contracts is always paramount and enforceable in our court of law. for adjudication purposes, a dedicated judge in the commercial division of the high court in malaysia has been assigned to preside over litigations relating to islamic banking and finance. the court ’ s adjudication role in islamic finance is reinforced by the support from the