A major report on Islamic Finance was launched at the inaugural 'Financial Stability Forum' organised by the Islamic Financial Services Board (IFSB) recently in Khartoum.
The report entitled "Islamic Finance: Global Financial Stability" was jointly published by the IFSB, the Islamic Development Bank (IDB) and the Islamic Research and Training Institute (IRTI).
"Islamic Finance: Global Financial Stability" examines the intrinsic strength of the Islamic finance model, the state of the industry and challenges and strategies for strengthening its financial stability, said experts at the forum.
The forum themed “Developing Capacity Building to Enhance Financial Stability in the Islamic Financial Services Industry” was chaired by Dr Sabir Mohamed Hassan, governor of Central Bank of Sudan, and chairman of the IFSB Council.
Two papers, "Capacity building in the financial sector" and "Capacity building for central banks and regulatory authorities" were presented and discussed at the forum.
It was attended by the central bank governors, governors’ representatives who are members of the IFSB Council and the vice president of the IDB.
Dr Ahmad Mohamed Ali, president of the IDB Group said, “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," he noted.
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, experts at the forum said.
"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," they added.
The report has recommended, among other things, the establishment of an Islamic Financial Stability Forum (IFSF), a dedicated forum to promote co-operation and collaboration among its members in areas such as surveillance, sharing of experiences in crisis prevention, management and resolution, implementation of international standards.
It will also boost global co-operation in capacity building and in development of emergency infrastructure and facilities.
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 October 29, 2008.
The task force, headed by Dr Zeti Akhtar Aziz, governor of Bank Negara Malaysia, includes an international group of eminent scholars, practitioners and Islamic finance experts.
Dr Zeti said, "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," he added