A report on Islamic Finance: Global Financial Stability was launched in the Inaugural Financial Stability Forum organised by the Islamic Financial Services Board (IFSB) on Tuesday, 6th April in Khartoum.
The Report examines the intrinsic strength of the Islamic finance model, the state of the Islamic financial services industry and challenges and strategies for strengthening financial stability in the Islamic financial services industry. Although the Islamic financial services industry was relatively less affected by the crisis, its underlying causes bear important lessons for the Islamic financial services industry going forward. This becomes even more important as Islamic finance operates within the global financial system that is characterised by increasingly large and volatile cross-border capital flows amid an environment of deeper international financial integration. Therefore, it is vital to accelerate the development of critical building blocks of the Islamic financial system to respond to the changing economic and financial landscape, and support the orderly development of Islamic finance for sustained global financial stability.
The Report recommends, among other things, the establishment of an Islamic Financial Stability Forum or IFSF. The IFSF will be a dedicated forum to promote cooperation and collaboration among its members in areas such as surveillance, sharing of experiences in crisis prevention, management and resolution, implementation of international standards as well as international cooperation in capacity building and in the development of emergency infrastructure and facilities.
The Inaugural Financial Stability Forum themed “Developing Capacity Building to Enhance Financial Stability in the Islamic Financial Services Industry” was held in Khartoum on 6 April 2010 and was chaired by H.E. Dr Sabir Mohamed Hassan, Governor of Central Bank of Sudan, and Chairman of the IFSB Council. Two papers were presented and discussed in the Forum, entitled (i) capacity building in the financial sector, and (ii) capacity building for central banks and regulatory authorities. The Forum was attended by the central bank Governors, governors’ representatives who are members of the IFSB Council and the Vice President of the Islamic Development Bank.
The Report entitled Islamic Finance: Global Financial Stability is jointly published by the IFSB, the Islamic Development Bank (IDB) and the Islamic Research and Training Institute (IRTI). Dr Ahmad Mohamed Ali, President of the IDB Group stated in the Preface of the Report, “We believe that there is much that Islamic finance can contribute to this process. From this perspective, the new financial order would be more inclusive and more global in nature, lending it more support and sustainability. Collectively, we hope that we will be able to build a more stable and more peaceful world for the future generations.”
The Report was produced by a Task Force on Islamic Finance and Global Financial Stability, in response to the recommendations of the Forum of the Global Financial Crisis and its Impact on the Islamic Financial Industry, which was organised by the IDB Group on 29 October 2008. The Task Force, headed by H.E. Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia, includes an international group of eminent scholars, practitioners and Islamic finance experts. Dr. Zeti remarked that it is hoped that the report will provide useful insights on Islamic finance and the important focus that needs to be given to financial stability in the rapidly changing international financial environment. Equally important is the capacity to contribute to global financial stability. The priorities identified in this report are also aimed at strengthening further the foundations that will ensure the sustainability and capacity of Islamic finance to contribute towards global growth and a greater shared prosperity.
The Report examines the intrinsic strength of the Islamic finance model, the state of the Islamic financial services industry and challenges and strategies for strengthening financial stability in the Islamic financial services industry. Although the Islamic financial services industry was relatively less affected by the crisis, its underlying causes bear important lessons for the Islamic financial services industry going forward. This becomes even more important as Islamic finance operates within the global financial system that is characterised by increasingly large and volatile cross-border capital flows amid an environment of deeper international financial integration. Therefore, it is vital to accelerate the development of critical building blocks of the Islamic financial system to respond to the changing economic and financial landscape, and support the orderly development of Islamic finance for sustained global financial stability.
The Report recommends, among other things, the establishment of an Islamic Financial Stability Forum or IFSF. The IFSF will be a dedicated forum to promote cooperation and collaboration among its members in areas such as surveillance, sharing of experiences in crisis prevention, management and resolution, implementation of international standards as well as international cooperation in capacity building and in the development of emergency infrastructure and facilities.
The Inaugural Financial Stability Forum themed “Developing Capacity Building to Enhance Financial Stability in the Islamic Financial Services Industry” was held in Khartoum on 6 April 2010 and was chaired by H.E. Dr Sabir Mohamed Hassan, Governor of Central Bank of Sudan, and Chairman of the IFSB Council. Two papers were presented and discussed in the Forum, entitled (i) capacity building in the financial sector, and (ii) capacity building for central banks and regulatory authorities. The Forum was attended by the central bank Governors, governors’ representatives who are members of the IFSB Council and the Vice President of the Islamic Development Bank.
The Report entitled Islamic Finance: Global Financial Stability is jointly published by the IFSB, the Islamic Development Bank (IDB) and the Islamic Research and Training Institute (IRTI). Dr Ahmad Mohamed Ali, President of the IDB Group stated in the Preface of the Report, “We believe that there is much that Islamic finance can contribute to this process. From this perspective, the new financial order would be more inclusive and more global in nature, lending it more support and sustainability. Collectively, we hope that we will be able to build a more stable and more peaceful world for the future generations.”
The Report was produced by a Task Force on Islamic Finance and Global Financial Stability, in response to the recommendations of the Forum of the Global Financial Crisis and its Impact on the Islamic Financial Industry, which was organised by the IDB Group on 29 October 2008. The Task Force, headed by H.E. Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia, includes an international group of eminent scholars, practitioners and Islamic finance experts. Dr. Zeti remarked that it is hoped that the report will provide useful insights on Islamic finance and the important focus that needs to be given to financial stability in the rapidly changing international financial environment. Equally important is the capacity to contribute to global financial stability. The priorities identified in this report are also aimed at strengthening further the foundations that will ensure the sustainability and capacity of Islamic finance to contribute towards global growth and a greater shared prosperity.
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