The adoption of these standards would contribute towards promoting greater transparency, recognition and consistency – thus facilitating greater cross-border Islamic financial transactions. We have given priority in promoting consistent and transparent standards on Islamic financial contracts. The development of Shariah standards is aimed as a point of reference on all Shariah principles governing Islamic financial contracts, and the standards is envisaged to become the globally preferred standards. The standards specify the requirement of Shariah and its application for product offerings. The standards are issued based on the three tenets of Shariah contract – the contracting parties; offer and acceptance; and subject matter of the  BIS central bankers’ speeches  1  contract. The other part of these standards specifies the execution or the operational aspects of the contract that covers the regulations, accounting, risk management, the appropriate legal documentation and the disclosure. Hence, these standards provide greater clarity, transparency and disclosure to each Islamic financial transaction. Secondly, is to have proper legal infrastructure and dispute resolution mechanism in place to safeguard Islamic finance transactions and integrity of the financial system. To share our experience, Malaysia enacted a complete set of legislation and guidelines for Islamic finance, and instituted tax neutrality in order to create a level playing field vis-a-vis conventional finance. Recently, the central bank introduced the Islamic Financial Services Act 2013 to replace the existing Islamic banking and takaful laws. The comprehensive legal framework provides a clear focus on Shariah compliance and governance in the Islamic financial sector.
This common platform would give both the Hong Kong and Malaysia financial markets the added critical mass for sukuk and boost liquidity in the secondary market, thus contributing towards the development of a global Islamic money market for a more efficient cross border liquidity management. The benefits that can be realised from the cooperation between our two markets are enormous. On that note, I wish to thank HKMA for hosting this joint conference and I bid the participants a productive endeavour. BIS central bankers’ speeches  3