The challenge before us is to build a new financial architecture that would allow for the more efficient functioning of not only financial intermediation within national economies but also across borders. Islamic finance, with its emphasis on a strong linkage to productive economic activity, its inbuilt check and balances and its high level of disclosure and transparency offers this prospect. Indeed, inherent in Islamic finance is the explicit elements that address several of the issues that have surfaced in the conventional financial system during the current crisis. Given the global dimension of the current crisis, the accelerated pace at which it has spread and the severity of its repercussions, it has called for a higher degree of collective determination by the international community to work together towards developing a global strategy that will evolve a financial system that is stable and sustainable over the entire business cycle. As Islamic finance continues to become an integral part of the global financial system, it will increasingly be exposed to risks of financial stress arising from global financial instability and global economic activity. This necessitates a greater global engagement between those that are driving the reform agenda given that it will result in new structures, standards and regulatory regimes for the industry. This is particularly important  BIS Review 123/2009  1  when such standards become the basis on which assessments are made by multilateral agencies, rating agencies and the market at large.
As the role and relevance of Islamic finance in the global financial system gains significance, it will not only increase its potential to contribute to global financial stability but also towards strengthening global growth." It is my honour to be invited to speak at this Seminar on Islamic Finance: During and After the Global Financial Crisis, jointly organised by the World Bank, the Islamic Financial Services Board (IFSB), the Islamic Development Bank (IDB) and the Institute of International Finance (IIF). This seminar takes place at a time in world history that is characterised by an unprecedented global financial instability, that has now precipitated a synchronised global economic recession. Although signs of an impending recovery in the world economy have appeared in the horizon, the pervasively virulent and far reaching repercussions unleashed by the crisis has shaken the foundations of the global financial system. This damage has yet to be repaired and rebuilt. This has sparked the international call for the reform of the financial architecture to one that will best serve the world economy, to one that is more resilient to shocks and to one that would reduce the prospect for future financial crises. History has shown that there have been more than a hundred distinct banking crises in this recent three decades. There is therefore an even more urgent need to find an enduring solution to ensure the stability of financial systems.