The growing interest in Islamic finance from new markets and the industry’s ability in general to absorb the shocks of the financial crisis better than the conventional sector has prompted several countries and analysts to take a further or a new look at Islamic finance.

In this respect, this year’s Summit theme “Global Financial Architecture: Challenges for Islamic Finance” also provides an alternative platform and perhaps strategies to come up with new ways of pre-empting the very issues that have caused a near collapse of the global financial system.

The Summit, which will be addressed by Dr Sabir Mohamed Hassan, Governor of the Central Bank of Sudan and Chairman of the IFSB Council, has already attracted the confirmed participation of some of the most influential regulators in global Islamic finance, and the participation of regulators from new markets in the European Union (EU) and Africa. Mr Yves Mersch, Governor Banque Centrale du Luxembourg, Stefan Ingves, Governor, Central Bank of Sweden, Rundheersing Bheenick, Governor of Bank of Mauritius and Sanusi Lamido, Governor of Central Bank of Nigeria will all be attending the IFSB Summit for the first time. Luxembourg was also admitted as an Associate Member of the IFSB in November 2009 – the first EU country to become a member of the IFSB to date.

Several international organisations including BIS, IOSCO, the World Bank, and market players from various industry segments, including financial institutions, advisory firms, international credit rating agencies and law firms have also confirmed their participation.

The main issues of this year’s Summit are also reflected in the five session topics which cover:

i)        The Changing Landscape of Financial Regulation: Implications for Islamic Finance

ii)       Macro-Prudential Surveillance Issues for Islamic Finance

iii)     New Architecture for Liquidity Management for Islamic Financial Instruments

iv)     Balanced growth of Islamic finance - the Sectoral Composition of the Islamic Financial Services Industry as a Contributor to Growth with Stability

v)      New Islamic Financial Architecture: Challenges Ahead.

The lessons learnt from the shortcomings in the existing regulations and policies guiding the international financial system have led to significant changes being initiated in the landscape of global financial regulation within the past year. In this respect, the first session will consider the implications for the regulation and supervision of Islamic finance; whether the existing financial regulation structure and prudential standards for Islamic finance is equipped to address the industry’s future challenges; and identify the priority areas of prudential regulation of Islamic finance that need attention.

There is an apparent void in Sharī`ah-compliant money market instruments for liquidity management, and in the development of Islamic money markets across the globe. As such, the second session will highlight the existing framework of liquidity management for Islamic financial instruments and the characteristics of a new architecture for the liquidity management; and identify the obstacles to past attempts to develop Islamic money markets and to facilitate liquidity management by central banks and other financial institutions. It will also suggest ways how international and regional cooperation can contribute to facilitating effective liquidity management by IIFS with the support of central banks.

Monitoring systemic risks in the financial industry is of immense importance so as to give early warnings of financial instability. This is especially so, given that financial crises can have huge costs. The third session, in fact, will look into the pertinent issues and areas of concern for macro-prudential surveillance in Islamic finance and identify the structures and risks that have to be examined in the Islamic financial services industry and the kind of data needed to conduct macro-prudential analysis and surveillance.

The recent global financial crisis has demonstrated that the composition of the different sectors within the financial industry – particularly banking and securities markets and their interaction – plays a role in its balanced development and stability. This fourth session indeed will discuss whether the current and evolving composition of the Islamic financial services industry is optimal for its sound development with stability; what role should national regulators and market players have in guiding the balanced development of the banking, capital market and Tākaful sectors; and what are the regulatory challenges in promoting this balanced development.

The relative roles of international financial institutions, standard- setting bodies, and global forums, which constitute the global international financial architecture and infrastructure, are still undergoing transformation in response to the global financial crisis. In parallel, the institutional architecture of financial regulations at the national level must respond to changes in both the industry and the global architecture. The final session of the Summit while looking ahead to some of the challenges facing the industry, will consider to what extent the roles of international organisations and standard- setting bodies have changed in the supervision of the global financial system and whether this implies the need for a new set of international infrastructure arrangements for Islamic finance in order to provide an effective contribution to global financial stability. It will conclude by exploring some of the challenges for the existing International Islamic

Infrastructure institutions such as the IFSB etc., and by ascertaining whether there is a need for changes in the various national institutional architectures for Islamic finance in response to global developments.

The main proceedings will be preceded by two traditional pre-Summit events – Public Hearings on IFSB Exposure Drafts (EDs) and IFSB Country Showcases, both of which have proved popular and informative in the past.

This year a public hearing will be held on an Exposure Draft on ‘Solvency Requirements for Takaful Undertakings’. The IFSB has issued two further EDs for public consultation. They include ‘Guidance Note In Connection With the Risk Management and Capital Adequacy Standards: Commodity Murabahah Transactions (CMT)’ and ‘Guidance Note on the Practice of Smoothing the Profits Payout to Investment Account Holders’.

There will also be a number of country showcases organized on 3rd May 2010. The Malaysia International Islamic Financial Centre (MIFC), for instance, is organizing a Malaysia Islamic Finance Showcase Dinner on the evening of the 3rd May 2010 which will be addressed by Tun Mahathir Mohamed, the former Prime Minister of Malaysia and the architect of the contemporary Islamic financial industry in Malaysia. Other countries have also expressed an interest in organizing showcases.

For more information on participation and sponsorship of the Summit, please visit www.ifsb.org or email: ifsb_sec@ifsb.org  

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These new challenges are also relevant to the global Islamic financial services ‎industry, which needs to ensure its resilience, as well as how it might contribute ‎to global financial stability and sustained economic growth. This is most pertinent ‎as the financial crisis has stimulated greater international interest in Islamic ‎finance and its potential role in shaping a future sustainable global financial ‎system. ‎

The Islamic Financial Services Board (IFSB) is at the forefront of international ‎efforts to increase regulatory cooperation and to introduce common prudential ‎and supervisory standards for the global Islamic financial services industry (IFSI). ‎Professor Rifaat Ahmed Abdel Karim, IFSB Secretary-General, emphasised that ‎any new financial architecture or financial reforms must also accommodate the ‎specificities of Islamic finance. “Since the distinctive characteristics of Sharī`ah-‎compliant financial transactions raise a number of issues related to the risks ‎borne by institutions offering Islamic financial services (IIFS), and failure to ‎adequately recognise and manage these risks could impose systemic risk to the ‎entire financial system and jeopardise the stability and soundness of the ‎industry,” he added. ‎

As such, the need to develop uniform prudential and best practices standards ‎that are tailored to the specific characteristics of these IIFS is vital. ‎

Against the above backdrop, the theme of this year’s 7th IFSB Annual Summit ‎‎“Global Financial Architecture: Challenges for Islamic Finance” could not be ‎more pertinent. The Summit is due to be held on 4 - 5 May 2010 at the Ritz-‎Carlton in Manama, Bahrain, which the Central Bank of Bahrain is hosting. ‎

It will be attended by key regulators in global IFSI, who have all confirmed their ‎participation. These include, among them, the participation of the Central Banks ‎of Bahrain, Kuwait, Lebanon, Mauritius, Nigeria, Saudi Arabia, Singapore, South ‎Korea and Sweden. The participation of the regulators from new markets in ‎Northern Europe and Africa is indicative of the growing worldwide interest in the ‎industry. ‎

For instance, Stefan Ingves, Governor, Central Bank of Sweden and ‎Rundheersing Bheenick, Governor of Bank of Mauritius will both be making their ‎debut participation at an IFSB Annual Summit. Similarly, Sanusi Lamido Aminu ‎Sanusi, the new Governor of the Central Bank of Nigeria, has also confirmed his ‎participation. Bank of Mauritius became a Full Member of the IFSB in November ‎‎2007, and the Central Bank of Nigeria in April 2009. Both are on the IFSB ‎Council. On top of these regulators, several international organisations including ‎the Bank for International Settlements, International Organisation of Securities ‎Commisions, The World Bank, and market players from various industry ‎segments, including financial institutions, advisory firms, international credit ‎rating agencies and law firms have also confirmed their participation. ‎

The main issues of this year’s Summit are reflected in the five session topics ‎which are:

• The Changing Landscape of Financial Regulation: Implications for Islamic ‎Finance
• Macro-Prudential Surveillance Issues for Islamic Finance
• New Architecture for Liquidity Management for Islamic Financial ‎Instruments
• Balanced Growth of Islamic Finance - the Sectoral Composition of the ‎Islamic Financial Services Industry as a Contributor to Growth with ‎Stability
• New Islamic Financial Architecture: Challenges Ahead

The main proceedings will be preceded by two traditional pre-Summit events – a ‎Public Hearing on IFSB Exposure Draft and the IFSB Country Showcases, both ‎of which have proved popular and informative in the past. ‎

This year the Public Hearing will be on the IFSB Exposure Draft on Solvency ‎Requirements for Takāful Undertakings. The Public Hearing is held within the ‎Public Consultation period of a proposed draft standard, which is part of the due ‎process in the IFSB preparation of standards. Under Article 4 (a) of the IFSB ‎Articles of Agreement a key objective of the standard-setting Board for global ‎Islamic finance is "to promote the development of a prudent and transparent ‎Islamic financial services industry through introducing new, or adapting existing, ‎international standards consistent with Sharī`ah principles, and recommend ‎these for adoption." ‎
There will also be a number of country showcases organised on 3rd May 2010. ‎These IFSB Country Showcases are an effective platform for selected countries ‎to portray their Islamic finance initiatives and experiences in adopting and ‎promoting the growth of a sound and stable Islamic financial services industry, ‎and presented to a high profile, focused group of potential investors and ‎stakeholders. It is also an excellent opportunity for networking and opening doors ‎to potential investments and business partnerships - from among the IFSB ‎members as well as the local, regional and international financial community - ‎specifically those attending the Summit.‎
The 7th Annual IFSB Summit aims to harness the latest developments and ‎issues in the regulation, prudential standards, current market practices and ‎future challenges. It aims to keep participants informed about the ‎developments of the global Islamic financial services industry; to provide a ‎platform for dialogue among peers; and to provide participants a platform ‎to contribute to the future direction of the industry! ‎

For more information on participation and sponsorship of the Summit, ‎please visit www.ifsb.org or www.ifsbbahrain2010.com or email: ‎ifsb_sec@ifsb.org

The financial crisis has augmented global awareness and interest in the Islamic financial services industry (IFSI). As the global financial community considers the lessons of the crisis and how best to respond to the new financial landscape that it confronts, it is vital for the IFSI to be alert and responsive to the unique challenges ahead. The 7^th Summit will be convened following the events of recent years that have dramatically transformed perceptions of the soundness and stability of the global financial system with respect to both its architectural framework and industry best practices.

The crisis has highlighted the challenge for regulators and key industry players to take the necessary steps to ensure that this rapidly evolving industry continues to remain sound and stable. Indeed, the Summit will provide a suitable platform to discuss; 1) how international organisations can best provide the structure and facilities that equip the industry for further sustainable growth; 2) lessons that need to be learned from the crisis and their implications for the IFSI; 3) areas of monitoring and surveillance that need more attention; and 4) whether the current and evolving composition of the industry provides an appropriate basis for its sound and stable development.  

The one-and-a-half day Summit aims to bring together an experienced international group of chairpersons and speakers, with a projected audience of over 200 delegates from all sectors of the financial services industry across the globe. The Summit will address the following topics:

• The Changing Landscape of Financial Regulation: Implications for Islamic Finance

• Macro-Prudential Surveillance Issues for Islamic Finance

• New Architecture for Liquidity Management for Islamic Financial Instruments

• Balanced growth of Islamic finance- the Sectoral Composition of the Islamic Financial Services Industry as a Contributor to Growth with Stability

• New Islamic Financial Architecture: Challenges Ahead

The confirmed Chairpersons and Speakers for the Summit are:

1. H.E. Rasheed Mohammed Al Maraj, Governor, Central Bank of Bahrain

2. H.E. Sheikh Salem Abdul-Aziz Al- Sabah, Governor, Central Bank of Kuwait

3. H.E. Rundheersing Bheenick, Governor, Bank of Mauritius

4. H.E. Sanusi Lamido Amino Sanusi, Governor, Central Bank of Nigeria

5. H.E. Mohammad Sulaiman Al-Jasser, Governor, Saudi Arabian Monetary Agency

6. H.E. Dr. Sabir Mohamed Hassan, Governor, Central Bank of Sudan and Chairman of the  IFSB

7. H.E. Stefan Ingves, Governor, Central Bank of Sweden

8. Professor Rifaat Ahmed Abdel Karim, Secretary-General, IFSB

9. Jane Diplock, Chairman of the Executive Committee, International Organisation of Securities Commissions

10. Read H. Charafeddine, First Vice Governor, Banque du Liban

11. Nigel Jenkinson, Adviser, Financial Stability Board, Bank for International Settlements

12. Dr. Tunc Tahsin Uyanik, Sector Manager, The World Bank

13. Cesare Calari, Managing Director, Wolfensohn & Company, L.L.C,USA

14. Richard Thomas, Chief Executive Officer, Gatehouse Bank Plc., UK

15. Professor Simon Archer, Visiting Professor, University of Reading, UK

16. Anour Hassoune, Vice President/ Senior Credit Officer, Moody’s Investors Service,UK

17. Dr. V. Sundararajan, Director, Centennial Group, USA

 Two events will precede the Summit, a Public Hearing on the IFSB Exposure Draft on Solvency Requirements for Takāful Undertakings and IFSB Country Showcases, which the IFSB is organising on 3 May 2010.

For more information on participation and sponsorship of the Summit, please visit www.ifsb.org or email: ifsb_sec@ifsb.org 

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