up and dance ” as one financier famously put it. but they are nervous and this nervousness is causing them to react to short - term developments and any sign that could signal that the music is about to stop. note for example, the obsession of the financial markets with when the fed is going to increase its interest rate by a quarter percentage point! frankly, i do not think any one of the qe central banks is thinking of putting down its fiddle just yet. but the anticipation is certainly creating instability and over - reaction in the global financial markets, with em currencies experiencing a high level of volatility. it is also not inconceivable that having run out of profitable opportunities in other parts of the markets, portfolio funds are now making currencies the next game in town. implications for malaysian economy and financial system these global developments obviously have implications for malaysia. first, the volatility in the global financial markets will continue to wash on to our shores and create a challenging environment for both policymakers and participants in our financial markets. such volatility does have an economic cost. second, the fact that for the first time all the major economies are showing positive growth will provide support to growth of the malaysian economy. however, until global growth can become self - reinforcing, the weak nature of external demand will remain a challenge. the significant contribution of domestic demand to growth in the face of the adverse external environment over the past several years is a tribute to the resilience of our economy and financial system. it is an outcome of not only the policies that were implemented during these years but also in the years before. the adverse global environment since the onset of the crisis in the aes has reduced the contribution of the external sector to growth. since 2007, the contribution of net exports to real gdp growth has been negative with the sole exception of 2014. this is in large part the outcome of the weak global growth which has reduced global demand for our exports, combined with strong domestic demand that has increased imports. over the longer term, the contribution of the external sector will need to expand to support a healthy and sustainable economy. with respect to this, we need to continue focusing on strengthening our economic relationships with other countries. the asean economic community is one opportunity for us to do so. the trans - pacific partnership agreement that is current being negotiated by 12 countries, including malaysia, is another. bis central bankers ’ speeches conclusion in conclusion, it seems to

risk management standards issued by the ifsb would serve as a guide to bank supervisors in this regard. notwithstanding the significant progress made so far, there are still outstanding issues confronting the islamic financial system today, particularly the different interpretations of the shariah injunctions. internationally, there continue to be debates among shariah scholars on the compliance to the shariah principles. in malaysia, the national shariah council on islamic banking and takaful has invited prominent international shariah scholars to participate in the deliberations as its members. the move is expected to help bridge the gaps in the interpretations of shariah injunctions in relation to the conduct of islamic banking business among the shariah scholars in different parts of the world. another forum through which the differences in the interpretations is being addressed is regular and continuous dialogue sessions by the scholars. a rm200 million endowment fund has been established by malaysia to support the role of the international community of shariah scholars in developing global islamic banking and finance. the development of a vibrant islamic banking sector cannot be achieved without the support of appropriate human capital development. underpinning the success of islamic banking system is the strengthening of research and intellectual capacity in the sphere of finance and shariah. the islamic banking industry needs to be equipped with a new breed of innovators, risk managers, regulators and supervisors who have the right blend of knowledge of finance and the understanding of the shariah. for this purpose, malaysia has established the international centre for education in islamic finance ( inceif ), which will commence operations in march 2006, aimed at developing talents in islamic finance. inceif will offer professional certification programs in islamic finance and will forge strategic alliances with domestic and foreign institutions of higher education to offer masters and phd. programs in islamic finance in specific areas of specialisation. as we advance forward, changes in the financial landscape will continue to accelerate and the level of complexity and sophistication in the financial markets will further intensify. islamic banking institutions will need to reinvent themselves to meet the emerging issues, challenges and opportunities. the regulatory and supervisory approach and the methodologies to be applied must continue to evolve in order to remain effective and relevant. in addition, given the global dimension of the islamic financial products and services, and the increasing interdependence of financial markets, efforts by individual countries to strengthen risk management practices needs to be matched by efforts to enhance the safeguards at the international level. the future