The Islamic financial services industry is part and parcel of the global financial infrastructure

Frankfurt, December 7, 2007 – “Islamic finance, despite its unique characteristics, is diverse in its application and has universal appeal as a viable alternative means of financing” Professor Rifaat Ahmed Abdel Karim, Secretary General of the Islamic Financial Services Board (IFSB) said in his opening address to the delegates of the 2nd Islamic Financial Services Forum: The European Challenge on Wednesday. He added that despite having its own nomenclature, the Islamic financial services industry (IFSI) operates within the existing global financial infrastructure. The interlinking of the IFSI with the conventional financial system subjects it to similar risks and challenges, and may still affect financial markets (albeit in a relatively minor way) should any adverse conditions occur. Thus, it is necessary that there be a set of prudential standards that cater for the specificities of Islamic finance.

The IFSB, an international organisation with the mandate to develop prudential standards for the IFSI believes that standardization efforts will largely contribute to promoting the soundness and stability of the IFSI, improving the supervision of institutions offering Islamic financial services (IIFS), and most importantly, providing a level playing field for IIFS enabling them to achieve their full potential in domestic and global markets. In its preparation of prudential standards for the IFSI, the IFSB adopts existing globally acceptable standards, for example Basel II, and adjust them to the specificities of the IIFS. This approach is adopted to bring about the seamless integration of the IFSI into the mainstream market. For the IFSB, the application of its standards should not compromise, but rather complement, the existing supervisory practices.

The Forum is the result of joint collaboration between the Deutsche Bundesbank, the Financial Stability Institute and the IFSB. Dr. Zeti Akhtar Aziz, Governor Bank Negara Malaysia, and Chairperson of the IFSB Council delivered the Keynote Address. The Forum drew the participation of 22 internationally recognised chairpersons and speakers, including four other central bank governors of IFSB member countries. They are:
1. Dr. Umayya Toukan, Governor Central Bank of Jordan
2. Dr. Shamshad Akhtar, Governor State Bank of Pakistan
3. Sheikh Abdullah Saoud Al-Thani, Governor, Qatar Central Bank
4. Sultan bin Nasser Al Suwaidi, Governor, Central Bank of the United Arab Emirates

The aim of the Forum, which was attended by more that 130 delegates, is to provide delegates with a better understanding of the intricacies of the IFSI as well as cast light on the operational aspects of the IFSB Standards.

This is the IFSB’s second Forum in Europe, the first of which was held in Luxembourg in November 2005.

Islamic Financial Services Board
Kuala Lumpur, Malaysia
Contact: Siham Ismail
Email: siham@ifsb.org
Tel: + 603 2698 4248 ext 119

1. 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 150 members of the IFSB include 37 regulatory and supervisory authorities as well as International Monetary Fund, The World Bank, Bank for International Settlements, Islamic Development Bank, Asian Development Bank, and 108 market players and professional firms from 31 countries.

2. The Council of the Islamic Financial Services Board (IFSB), in March 2006, amended the IFSB Articles of Agreement to enable insurance and securities regulatory authorities to join the IFSB as Full Members. With this amendment, Full Membership is now available to:
a. Supervisory authorities responsible for the supervision of banking, securities and insurance or Takaful industry of each sovereign country that recognizes Islamic financial services, whether by legislation or regulation or by established practice, and
b. inter-governmental organizations that have an explicit mandate for promoting Islamic finance and markets.

This release was published on openPR.