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IFSB programmes to facilitate the development of the Islamic financial services industry     
Press Release > 2018

Welcome Address by the Secretary-General of the IFSB at the CBK-IFSB Conference on Islamic Finance: A Universal Value Proposition

Date posted: 2 May 2018

Date : 2 May 2018
Event / Venue : CBK-IFSB Conference on Islamic Finance: A Universal Value Proposition | Kuwait City, Kuwait
Speaker : Dr. Bello Lawal Danbatta Secretary General, IFSB

Assalamu’alaikum (السلام عليكم ورحمة الله وبركاته) and a very good morning to all of you.

It gives me great pleasure and honour to welcome you today to this high-level international Islamic finance conference, themed, ‘Islamic Finance: A Universal Value Proposition’, in this beautiful city of Kuwait, a country considered as one of the pioneers of Islamic finance.

I am grateful to all governors and senior officials of the central banks and monetary authorities, heads of supervisory authorities, officials representing international organisations, heads of financial institutions as well as other distinguished guests, for being here with us today.

To our members, I would like to add my personal words of welcome and to thank you for your continued support of the IFSB.

My special vote of thanks goes to H.E. Dr. Mohammad Y. Al-Hashel, the Governor of the Central Bank of Kuwait and Chairman of the IFSB Council 2018 for his generosity and support for organising this joint high-level conference, in conjunction with the IFSB Annual Meetings 2018.

I believe, under His Excellency’s leadership, the IFSB is determined to take a giant leap forward in delivering its mandates. Thank you, Chairman.

Taking this opportunity, I also would like to candidly thanking the staff of the CBK and my colleagues at the IFSB, for their enormous efforts in making this conference a success.

The Role of the IFSB: Global Regulation for Islamic Finance

Your Excellencies, Distinguished guests, Ladies and Gentlemen,

Please allow me to give you some brief updates on the IFSB and our activities.

With the efforts of its founding members, the IFSB was established in 2002 with a clear vision and mandate for the benefit of global Islamic finance industry.

The IFSB serves as an international standard-setting body of the regulatory and supervisory authorities that have vested interest in ensuring the soundness and stability of the Islamic financial services industry.

Today, the IFSB is recognised as the leading international institution, promoting the development of a prudent and transparent Islamic financial services industry through introducing new, or adapting existing international standards that are consistent with Sharīʻah principles.

The mandate of the IFSB is defined broadly to include banking, capital market and insurance sectors. For this reason, the work of the IFSB complements that of the Basel Committee on Banking Supervision (BCBS), International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS).

We work closely with these institutions in delivering our mandate.

As this year marks the 15th anniversary of the IFSB, the growth and development of this international institution, has been only possible with the unwavering support of its members.

The journey, which started with its nine founding members (Bahrain, Indonesia, Iran, Kuwait, Malaysia, Pakistan, Saudi Arabia, Sudan and the Islamic Development Bank), has transformed the IFSB into an institution with 185 members operating in 57 jurisdictions.

In our membership, we have 75 regulatory and supervisory authorities, 8 international inter-governmental organisations such as BIS, ADB, IMF, IDB, World Bank, and 102 market players (financial institutions, professional firms, industry associations and stock exchanges).

In the last 15 years, the IFSB has played a critical role in the global Islamic financial services industry by issuing international standards that take into account the specificities of Islamic finance.

Apart from research and reports, the IFSB has issued 27 high quality standards, guiding principles and technical notes that provide the basis for the orderly development of a broad-based Islamic financial services covering all three sectors of the IFSB mandate: Islamic banking, takāful and Islamic capital market sectors.

These standards include first-generation standards and second-generation standards, such as equivalence of Basel III issued after the global crisis.

Since its inception, one of the key challenges the IFSB faced is to establish its international authority and credibility as a standard-setting institution. However, this is where most of the success has come for the IFSB and with the commitment of its members we will continue to develop and sustain that inshAllah.

This accomplishment is the outcome of a collective effort of the IFSB Council, Technical Committee and its Working Groups, active participation of all IFSB members, contribution of my predecessors, cordial relations with IFSB counterparts such as BCBS and IAIS, and last but not the east the relentless efforts of the IFSB Secretariat.

The result of the IFSB’s standard implementation surveys indicated that these standards have been adopted by the national supervisory authorities and have helped in promoting the harmonisation and standardisation of regulatory approaches to provide a level playing field in the Islamic financial services sectors of our members’ jurisdictions. However, more work need to be done collectively to improve the level of adoption across these jurisdictions.

I would like to take this opportunity to assure all IFSB members that the IFSB Secretariat is ever committed to adding value to your memberships and we are ever ready to address your concerns and to assist you in the implementation of our standards either through workshop, technical assistance, policy advice or capacity building.

We solicit your kind cooperation in telling us your expectations. I also would like to take this opportunity to inform all Full, Associate and Observer Members that we currently working on new initiatives that will enhance our services to you and the global Islamic finance industry.

Theme of the Conference

Your Excellencies, Distinguished guests, Ladies and Gentlemen,

Please permit me say few words about today’s conference.

With the double-digit growth, the Islamic financial services industry has undergone rapid expansion globally, which echoes its capability to meet the global goals of economic and social development for both Muslims and non-Muslims consumers and businesses alike.

The theme of the conference itself reflects the significance of the universality of Islamic finance philosophy. Islamic finance - with its essential features and overarching principles of inclusiveness, innovation, stability - offers a universal value proposition, which can fit into all types of economies regardless of religious dominance, and can address key economic and financial challenges, which we face in today’s world. It can help in achieving a vibrant socio-economic development that can lead to more prosperous, diversified and equitable societies.

With this background, today’s conference provides a platform for global dialogue to all industry stakeholders to deliberate and highlight collectively the role of Islamic finance in the broader context in order to promote global economic cooperation and generate ideas that can transform the recent technological developments and disruptions into an opportunity.

Particular emphasis and debate on macro-economic diversifications, building a dynamic and robust regulatory eco-system, and addressing the emerging risks facing the Islamic financial services industry, will provide intellectual inputs that is necessary for the sustainable economic growth and shared prosperity for all.

To address these issues, we have distinguished panellists, and I hope that the discussions will produce solid recommendations for the Islamic financial services industry moving forward.

Concluding Remarks: How IFSB can support the global IFSI

Your Excellencies, Distinguished guests, Ladies and Gentlemen,

Let me conclude by highlighting some points on how the IFSB can play its role to support the global Islamic financial services industry.

First, as H.E. Dr. Mohammad Y. Al-Hashel rightly pointed out in one of his speeches, ‘enabling environment for a sustainable and resilient industry is very important’. In this respect, the IFSB as an international institution will continue playing its due role to achieve its objectives under its mandates.

Recently, the IFSB has issued three Exposure Drafts including the Core Principles for Islamic Finance Regulation [Islamic Capital Market Segment] for a two-month Public Consultation period starting 28 March 2018 to 28 May 2018, and I would like to invite comments from all stakeholders of the industry to improve the quality of the drafts.

Moreover, all stakeholders are also invited to participate in the public hearing of these three Exposure Drafts scheduled for 7-8 May 2018 in Kuala Lumpur, Malaysia.

Second, we are committed for cooperation that is more global and inclusive. The collaboration of capacity building with our members to adopt the IFSB standards that we have issued is our top priority in our Strategic Performance Plan agenda.

Third, our diversified membership is a unique source of strength for the IFSB and we will continue to deepen our engagement with our members and with the global IFSI. In this respect, I would like to express my profound gratidude and appreciation to H.E. Dr. Mansur Muktar, Vice President of the IDB Group for their continuous financial support to the IFSB including the latest technical assistance of grant of USD 250,000 which we signed yesterday.

Fourth, I believe that the IFSB has a pivotal role to play towards integrating Islamic finance into the global economy through its cross-sectoral standards. In this case, among others, we have issued a Core Principles for Islamic Finance Regulation [Islamic Banking Segment] and with the support and commitments from the IMF and World Bank. We are hoping soon this standard will be in the compendium of standards of the FSB.

These Principles include an assessment methodology that can assist all regulatory and supervisory authorities to carry out self-assessments of the progress made in the development of their regulatory frameworks and in achieving greater consistency in the implementation of the IFSB standards. It is worth mentioning that the IMF, World Bank, the BCBS, IDB, ADB, have been members of this important working group.

Finally, with the rapid technological development in the global financial industry, in which capacity wise, the market players are six-steps ahead of the regulators and the international standard-setting bodies, especially due to emerging regulatory challenges such as Fintech, Blockchain, Big data analytics, artificial intelligence, and robotics.

There is a strong need for immediate commitment of resources and intellect in building a robust capacity to manage the challenges posed by these technological innovations. My specific submission here includes, among others, building the capacity of our Sharīʻah scholars.

On that note, I wish you very productive deliberations and discussions which will allow us to generate new ideas in realising the objectives of today’s high-level conference.

Once again thank you all for your participation and wassalamu alaikum wa rahamatullah ta’ala wa barakatuhu.

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