Indeed, since 1998, the median forecast from this SPF question has stayed within a very narrow range. However, the amount of disagreement around this median has increased recently. Much of this increase is related to lower forecasts for the 10-year average. During the past decade many central banks have begun to explore ways to improve through surveys their measurement and understanding of the public’s inflation expectations. At the New York Fed in November last year we had a conference where many different aspects of this research were discussed. In addition to initiating new surveys and gradually moving from traditionally qualitative to more quantitative questions and measures, research is being conducted to analyze the quality and information content of survey-based measures of consumer inflation expectations. In late 2006 at the New York Fed we initiated a major research project to examine a number of issues: First, what is the best way to measure the public’s inflation expectations in terms of inflation concepts and forecast horizon? Second, how do households form and update their expectations of future inflation: to what extent are they based on past inflation experiences and what information sources do they rely on? Third, do people act on their expectations and if so, how? My remarks today will mainly focus on the first set of issues, but I will conclude with some preliminary research on the other two.
The growing internationalisation and cross-border activities in Islamic finance in recent years further accentuates the importance to enhance the ability of the Islamic financial system to withstand shocks from externalities. Moreover, access to a robust liquidity management infrastructure will reduce the cost of intermediation which is an important enabler for a more efficient and competitive Islamic financial system. Recognising that liquidity management in the Islamic financial system is still under-developed, a Liquidity Task Force was established by the IFSB in 2009 with the aim to formulate an institutional arrangement to address this need. Significant progress has already been made in this endeavor with several key proposals now at the final stage for operationalisation. When operationalised, this liquidity mechanism will be another landmark development for Islamic finance. Conclusion The recent global financial crisis has spurred the resolve of the world community to chart a new course towards greater and lasting social and economic stability with fairness and accountability. Whilst this presents a unique opportunity for Islamic finance to transition into the next development stage of greater international integration, there needs to be a higher level of resilience to withstand the new challenges it will bring. This, in essence, requires the strengthening of the financial infrastructure to preserve the soundness and stability of the Islamic financial system. Indeed, our collective will to mobilise a higher level of global cooperation in promoting this outcome will enhance the prospects of Islamic finance to contribute towards securing global financial stability and a greater shared prosperity. 6  BIS Review 64/2010