I have indicated that the Monetary Policy Committee’s decisions on interest rates are announced immediately; and that the minutes of its meetings are published. In addition, the Bank of England publishes a quarterly Inflation Report, which gives a full account of its monetary actions, and their effect, over the past quarter, and a detailed assessment of the forward outlook for inflation, including a projection looking two years or so ahead and an assessment of the relevant upside or downside risks. This degree of transparency is, we believe, important in generating greater public understanding of the stance of monetary policy, as well as better-informed public debate and greater public confidence in the process. BIS Review 110/1997  -2-  7. Closely related is a fourth key feature of the arrangements -- a high degree of accountability by the central bank for its actions. We are accountable in the first instance to our own Court of non-executive Directors, who are specially charged with monitoring the process by which the Monetary Policy Committee discharges its responsibilities. We are accountable also to the government, for which purpose we are required to write an open letter to the Chancellor of the Exchequer if inflation deviates by more than 1% either side of the 2½% target, explaining the divergence and the action taken to bring it back on course -- an open letter, and hence a further element of transparency.
A more standardized contract creates greater certainty and predictability about the characteristics of the financial contracts. When the parties involved are better able to understand their rights and obligations, stakeholders’ confidence in the market would correspondingly improve. In essence, standardization of documentation, products and practices are essential to ensure that the markets are fair, efficient and transparent. Whilst contract and product standardization is encouraged to the greatest extent possible, we also need to be mindful not to let it stifle innovation. As a nascent industry, the need for innovation and competition in Islamic finance is so important that its absence might impede its growth. One important area is the need to appreciate and subscribe to the value of diversity in Shariah. I believe that diversity in Shariah interpretation is the seed to harness innovation in Islamic finance. Diversity in opinions and practices generate wider options for consumers and practitioners. I believe that this is very fundamental. It is also for this reason that Malaysia subscribes to the concept of mutual recognition of the interpretations and decision of Shariah principles reached by a recognized Shariah body across countries. We believe in the need for diversity as it is an impetus for sustainable global growth of Islamic finance. While diversity would create a conducive environment for Islamic finance to prosper, varying interpretations of Shariah within a country can add to the complexity of the operating framework of Islamic financial institutions.