A second point in connection with this is that; it is inevitable that in time, together with healthier price signals, the resources of our economy will shift to firms and sectors with higher productivity, as was the case in other countries. The firms and sectors that had benefited from the consumption and pricing habits of the inflationary environment, but could not work efficiently, will be leaving their places, in this process, to more competitive firms and sectors with higher productivity. Dear audience, At this point, I wish to mention an issue, regarding the changes in the pricing policy of producers, extremely significant in terms of its effect on the future course of inflation. This is the process of exchange rate affecting inflation, known also as the pass-through effect. The effect of exchange rate on inflation in Turkey is weakening day-by-day, due to the changing pricing patterns of producers as a result of the decline in inflation. As observed especially in the recent period, the impact of the movements in exchange rate on inflation began to materialize less than expected, and also at a lower level and in a more lagged fashion compared to the past chronic inflation period.
Meanwhile, our own South East Asian region and that of North Asia and the Middle East countries continue to have high surplus savings seeking opportunities for investment and new asset-classes for greater risk diversification and improved returns on their investments. Hundreds of years ago, the ports of Nusantara were destinations for the spice trade to Europe via India and the Middle East . In this context, Islamic finance can serve as a bridge that links the Nusantara region to the capital surplus economies. Already, our financial institutions are venturing to have a presence in the Middle East and we welcome their presence in our financial system. This has now in fact resulted in the cross-pollination of talents and resources, giving rise to innovative products and services, creating depth and breadth to the respective financial markets. Just as the Straits of Malacca served as an important maritime conduit for the Nusantara region, Malaysia and Indonesia has the potential to serve as an important intermediary for mobilising capital to meet the requirements of the Nusantara region, and to be a distribution centre for shariah compliant  2  BIS Review 73/2007  securities and to extend the regional Islamic capital markets to other parts of the world. Of importance will be our joint efforts to promote the standardisation of the Islamic regulatory and compliance matters. In relation to this, Malaysia and Indonesia is already working jointly to promote research capabilities and the pool of talent and technical expertise in Islamic finance.