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The IFSB Secretary-General's Welcome Address at the First Innovation Forum: Revitalising Creativity and Sustaining Competitive Value

Date posted: 26 November 2019

Date : 12 November 2019
Event / Venue : First Innovation Forum "Revitalising Creativity and Sustaining Competitive Value" | Jakarta Convention Center | Indonesia
Speaker : Dr. Bello Lawal Danbatta Secretary General, IFSB

Assalamu’alaikum and a very good morning to all of you.

It gives me a great pleasure and honor to welcome you all today to this inaugural Innovation Forum of the IFSB in this beautiful city of Jakarta, Indonesia, a country considered the biggest Muslim Economy and one of the leading Islamic finance jurisdictions. 

I am grateful to all the governors and senior officials of the central banks and monetary authorities, heads of supervisory authorities, officials representing international organizations, 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 thanks for your continuous support of the IFSB.

My special vote of thanks goes to H.E. Dr. Perry, the Governor of Bank Indonesia, Inaugural Chairman of the IFSB Executive Committee, and Host of the 14th IFSB Summit, for his generosity and support in hosting this historic inaugural Innovation Forum of the IFSB, in conjunction with the 14th IFSB Summit. 

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

Taking this opportunity, I would also like to candidly thank the staff of the Bank Indonesia and my colleagues at the IFSB, for their enormous efforts in making this event 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 and commenced operations in 2003 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 Organisation of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS), and most recently the work of International Association of Deposit Insurance (AIDI). 

We work closely with these institutions in delivering our mandate. 

As this year marks the 16th 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 that now have over 180 members operating in 57 jurisdictions. 

In our membership, we have 78 regulatory and supervisory authorities, 8 international inter-governmental organisations such as BIS, ADB, IMF, IDB, World Bank, and 95 market players (financial institutions, professional firms, industry associations and stock exchanges). 

In the last 16 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 30 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. 

These standards include first-generation standards and second-generation standards such as equivalent of Basel III issued after the global financial 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 develop and sustain that. 

This accomplishment is the outcome of a collective effort of IFSB Council, Executive Committee, 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 least the relentless efforts of my Secretariat. 

The result of the IFSB’s standard implementation Surveys indicated that these standards are adopted by the national supervisory authorities and have helped in promoting the harmonization 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.

And I will 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 will also 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, today’s event is one of these initiatives.

About the Innovation Forum

Your Excellencies, Distinguished guests, Ladies and Gentlemen,

The pre-Summit events are an important platform for IFSB members and non-members to articulate their Islamic finance initiatives, incentives and experiences in adopting and supporting the growth of a sound and stable Islamic financial services industry.

Islamic finance - with its essential features and overarching principles of inclusiveness, innovation and 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 a more prosperous, diversified and equitable societies.

It is part of the IFSB’s mandate to create a platform for cooperation among its members that will promote the development of Islamic financial instruments for the global resilience of Islamic finance industry. 

With this short background, today’s innovation forum provides the platform and opportunity for our members and non-members to listened, share experiences and exchange ideas on the most recent Islamic finance innovations and initiatives in the Islamic financial services industry that will enable them to develop further and regulate better Islamic finance services in their respective jurisdictions.

In broader context, this forum is aimed to promote global cooperation and generation of ideas that can transform the recent technological developments and disruptions into an opportunity from both commercial and regulatory perspectives. 

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, this platform will provide the opportunity for our regulatory and supervisory authority members as well as our market players to articulate better the risks and rewards of innovation in the Islamic finance space. 

Concluding Remarks: 

Your Excellencies, Distinguished guests, Ladies and Gentlemen,

To conclude, there is a strong need for immediate commitment of resources and intellect in building a robust capacity to leverage on the technological innovations to drive further economic value propositions of Islamic finance for a reliable and sustainable economic development. My specific submission here includes, among others, building the capacity of our Regulators and Sharīʻah scholars to accommodate the innovation particularly related to technology. 

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

Once again I welcomed and thank you all for your participation in the first IFSB Innovation Forum.

wassalamu alaikum wa rahamatullah ta’ala wa barakatuhu.

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