IFSB and BDCB Wraps Up 16th Summit, Spotlighting Islamic Finance’s Role in Ensuring Global Stability Amidst Emerging Risks

Bandar Seri Begawan, BRUNEI DARUSSALAM – May 9, 2024 – The Islamic Financial Services Board (IFSB), an international standard-setting body for the Islamic finance industry, concluded the 16^th IFSB Summit today. Hosted by the Brunei Darussalam Central Bank (BDCB), the Summit brought together more than 200 high-level participants from over 20 countries, including regulators, policymakers, industry leaders, and representatives from inter-governmental institutions and academia.

With the theme ‘Islamic Finance and Financial Stability in an Evolving Environment: Navigating Emerging Risk’, the two-day Summit underlined some of the important global shifts and changing dynamics in the global environment, recognising both opportunities and new risks they present for the Islamic finance industry. The panel sessions invited the industry to evaluate the implications of these challenges on Islamic finance stability and resilience, with a focus on macroprudential policy and liquidity risk management.

The Summit featured prominent organisations such as central banks, international organisations and international Islamic finance community representatives from Bangladesh, Indonesia, Malaysia, Morocco, Saudi Arabia, Oman, Somalia and the Philippines, and market players. The participation of local and international organisations at the event exemplifies the joint efforts of policymakers, regulatory and supervisory authorities and Islamic financial institutions to address critical gaps, monitor cross-border risks, and foster stability in the Islamic financial services industry.

Four panel sessions were held on the second day of the Summit, curated around the industry’s adaptability and responsiveness to evolving conditions. Among the key takeaways includes;

1. Collaborative efforts among stakeholders and market players: Furthering the Islamic finance agenda is a collective effort. It is critical for regulators, policymakers, and institutions, alongside guidance from international bodies including standard-setters like the IFSB, to shape actionable strategies and frameworks for the industry as it navigates the emerging conditions.
2. Advancing digitalisation and innovation: Digitalisation is opening bigger doors for the Islamic finance market to diversify its offerings, providing market differentiation, where FinTech is perfect to bridge this opportunity with the growing market demands. While FinTech companies are racing to tap into this potential, the implementation front can be timely due to regulatory and policy challenges, which may deter FinTech players from investing in the industry.
3. Improving financial literacy and access to Islamic finance: While technology remains a permanent fixture, focus must also be made on deepening financial literacy and increasing accessibility to Islamic financial instruments among the population. For this reason, innovations and product developments must prioritise affordability, ease of use, and grassroots-level extension.
4. Role of regulators: As the industry continues to evolve in response to emerging trends, regulators and policymakers in each country must play an active role in fostering confidence in the industry, consumers, as well as investors who are looking into the economy. Collaboration with regulators and standard-setting organisations is imperative for the development of risk-hedging tools, underscoring the importance of collective efforts in shaping the future of Islamic finance.

In his closing remarks, Mr. Mardini Eddie, Assistant Managing Director (Monetary Operations), BDCB, reiterated the transformative power of embracing change and innovation towards bolstering sustainable, inclusive, stable and resilient growth in the Islamic financial services industry. He also emphasised the importance of collaboration and proactive strategies amidst global challenges and emerging risks for financial stability and prosperity.

The IFSB Summit serves as a platform for the international standard-setting body to facilitate dialogue on critical issues shaping the Islamic finance industry’s resilience and policy implications of emerging risks. It continues to be a cornerstone for policymakers and stakeholders committed to advancing the Islamic finance industry.

For more info on the 16th IFSB Summit, visit www.ifsbsummit2024.com, and for similar events from the IFSB, visit www.ifsb.org.