The two-day IFSB Summit themed as “Global Financial Reforms: The Changing Regulatory Model and Islamic Finance” is being hosted by the Central Bank of the Republic of Turkey and is being attended by more than 200 delegates across the globe comprising of officials and representatives from international institutions, supervisory bodies, market players, academia, rating agencies and other stakeholders of Islamic financial services industry.
Dr. Erdem Basci, Governor, Central Bank of the Republic of Turkey, delivering a welcoming address, emphasised the need for structural reforms that can assist reducing procyclicality in the financial system and make it more resilient to the external shocks. He noted that emerging market economies have weathered the recent financial crisis in a more effective manner than the advanced countries, which provides the former an opportunity to look at their financial systems in a more structural perspective. He underscored the need for making the financial system more inclusive so that it can provide an avenue for better income and wealth distribution in the economy. He also appreciated the role of the IFSB in providing a platform for the supervisors and other stakeholders of the Islamic financial services industry for coordinated initiatives and preparation of important prudential standards for the industry.
Jaseem Ahmed, Secretary General of the IFSB, enlightened the participants on the work being conducted at the IFSB to adapt global regulatory changes for the Islamic financial services industry. In addition, he featured the key points of the IFSB’s Strategic Performance Plan that has been recently approved by the IFSB Council. Under this Plan, a roadmap has been developed to engage with the stakeholders for the further development of Islamic finance. The roadmap will mainly focus on strengthening the stability and resilience of Islamic finance through the development of a range of new standards and guiding principles. Moreover, it will endeavour to strengthen the basis for market development and to spur the development of new Shariˋāh compliant instruments. In order to support the formulation, adoption and implementation of its standards, the IFSB will be launching targeted research, comparative studies and customised training, learning and awareness programmes. He also announced the launch of a new global initiative to revise the “10-year Framework and Strategies for the Development of the Islamic Financial Services Industry” in coordination with the Islamic Development Bank and Islamic Research and Training Institute.
He also informed the participants about various strategic partnerships made by the IFSB with different stakeholders. “The pursuit of financial stability”, said Jaseem, “does not however solely depend on regulatory development and prudential standards”. “It depends also on collaboration and cooperation mechanisms that help all stakeholders towards achieving the common goals of a sound and sustainable financial services industry”.
Dr. Mahmoud Mohieldin, Managing Director of the World Bank, in his keynote address, elaborated the evolving role of Islamic finance in the global financial system and enhancing financial inclusion. He stressed the need for a strong regulatory oversight for Islamic financial services industry and related capacity building. He also alluded to various corporate governance issues facing the industry, including those related to Shariˋāh governance frameworks. Keeping in view the recent emphasis on macro-prudential supervision, he underscored the need to strengthen insolvency and resolution regimes in the jurisdictions. Highlighting some strengthens of the Islamic finance, he mentioned that ethical principles and linkage with the real sector could help the Islamic financial services industry to be more resilient and robust, provided attention is given to strengthening the governance framework of the market players. He also shared various initiatives taken by the World Bank to support and enhance the capacity building and research in the Islamic finance.
Dr. Cevdet Yilmaz, Minister of Development of the Republic of Turkey tracked the background of recent financial crisis and mentioned some economic, social and political implications of the ongoing economic crisis in various economies of the world. He stressed the need to diagnose the causes of the crisis and make necessary structural and regulatory reforms, without threatening the stability and confidence of the financial markets. While comparing the economic performance of various regions, he noted that emerging markets have demonstrated a better performance in recent years. He cautioned that a financial system that is divorced from the real sector will prove to be more vulnerable to systemic shocks. Noting the inbuilt strengths of Islamic finance, he emphasised that Islamic financial products are not meant for addressing the needs of Muslim-majority nations only, but have the potential to address the financial needs of all communities. He also enlightened the delegates on the Turkish government plans to make Istanbul a regional and global financial centre, which will also work for the development of Islamic finance.