By MUSHTAK PARKER | ARAB NEWS
The Islamic Financial Services Board (IFSB), the prudential and supervisory standard-setting organization for the global Islamic financial industry, embarked on a new phase of its development which may lead to a review of its mandate to facilitate a wider reach including those countries and organizations that are not currently members of the board.
At its 8th Annual Summit in Luxembourg last week and held for the first time in Europe, new Secretary-General Jaseem Ahmed; summit host, Yves Mersch, Gov. Banque centrale du Luxembourg; and Faris Sharaf, the chairman of the IFSB governing council and governor of the Central Bank of Jordan were indeed upbeat about the remarkable performance of the global Islamic financial services industry amidst the more challenging environment presented by the recent international financial crisis.
This is reflected in the phenomenal growth of assets, albeit from a small base initially, reaching about fifteen percent per annum during the last decade and currently estimates at $1.2 trillion with the potential to grow to $4 trillion over the next few years. The growth, according to Ahmed, has been across all asset classes, including banking, Takaful, asset management and Sukuk; and across new geographical areas. The strengthening of Islamic finance in the Middle East, its gathering momentum in emerging economies, and its emergence in Europe are all part of this transformation.
The global financial crisis has led to a recognition of the importance of moving toward a macroprudential framework that would help to maintain financial stability in order to minimize the impact on the real economy of disruptions to the financial sector. For Islamic finance in particular, the pressing issue concerns the need to ensure that the regulatory and supervisory framework for Islamic finance is consistent with ongoing global regulatory and supervisory reforms. This is particularly important since Islamic finance is rapidly being mainstreamed and increasingly integrated into global financial markets.