Cross Border Expansion of Financial Institutions Requires New Supervisory Approaches and Mechanisms

International Monetary Fund (IMF) Managing Director, Mr. Rodrigo de Rato and Dr. Zeti Akhtar Aziz, Chairperson of the Islamic Financial Services Board (IFSB) Council deliver Keynote Addresses at the 4th Islamic Financial Services Board Summit in Dubai on the morning of 15 May 2007.

• Mr. de Rato’s address touched on the acceleration of financial globalisation which has brought forth challenges related to regional financial integration, financial stability and supervision of financial institutions. Dr. Zeti Akhtar Aziz highlighted the blurring of traditional sector boundaries between the banking, capital markets and insurance are among the trends in the financial services industry.

• The industry’s trend for convergence, while increasing the value proposition for consumers, poses new challenges for supervisors. In ensuring the overall soundness and stability of the financial sector, there is a need for a common vision for the Islamic financial services industry. Enhancing efforts of international cooperation and collaboration in addition to developing a strong supervisory framework are key factors to move the industry on a highly dynamic and rapidly evolving environment.

• From a more micro perspective, the Governor of the Central Bank of the United Arab Emirates, Sultan bin Nasser Al Suwaidi, said the challenges for regulators are finding more:
1. Shari’ah compliant financial instruments, suitable for managing short-term liquidity;
2. transparent ways to differentiate between dividend paid to shareholders and investors (or depositors); and
3. harmonised Shari’ah board rulings.

• Meanwhile the IFSB Secretary General, Professor Rifaat Ahmed Abdel Karim, re-emphasised the IFSB’s mandate to develop prudential standards for Islamic financial services industry, saying that the IFSB draws upon existing internationally recognised standards by the Basel Committee, International Organisation of Securities Commission and the International Association of Insurance Supervisors as well as the recommendations of the Joint Forum. The IFSB adapts and complements these standards while addressing the specificities of institutions offering Islamic financial services.

• The 4th IFSB Summit is held under the Royal Patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, and hosted by the Central Bank of the UAE. 25 speakers are addressing the two-day Summit which is attended by over 250 delegates from international organisations and financial institutions from over 25 countries.

The Islamic Financial Services Board (IFSB), which is based in Kuala Lumpur, was officially inaugurated on 3rd November 2002 and started operations on 10th March 2003. It serves as an international-standard setting body of regulatory and supervisory agencies that have vested interest in ensuring the soundness and stability of the Islamic financial services industry, which is defined broadly to include banking, capital market and insurance. In advancing this mission, the IFSB promotes the development of a prudent and transparent Islamic financial services industry through introducing new, or adapting existing international standards consistent with Islamic Shari'ah principles, and recommend them for adoption.

The 125 members of the IFSB include 33 regulatory and supervisory authorities as well as International Monetary Fund, World Bank, Bank for International Settlements, Islamic Development Bank, Asian Development Bank, and 87 market players from 22 countries.

Islamic Financial Services Board
www.ifsb.org
tel: + 603 2698 4248 ext 119
email: siham@ifsb.org

This release was published on openPR.