-3.5 92  94  96  98  00  02  04  06  08  10  Sources: Bank of England, Bloomberg, Chicago Board Options Exchange, Debt Management Office, London Stock Exchange, Bank of America Merrill Lynch, Thomson Reuters Datastream and Bank calculations. (a) 90-day moving average of index. Index represents number of standard deviations from the mean of a range of market liquidity measures, incorporating prices and volumes, normalised on the period 1999–2004. The indicator is more reliable after 1997 as it is based on a greater number of underlying measures. See also Box 1 of the April 2007 Bank of England Financial Stability Report. 10  BIS central bankers’ speeches  Chart 9:  Chart 10:  Major UK banks’ and LCFIs’ leverage ratios(a)(b)  Major UK banks’ and LCFIs’ price to book ratios(a)  Maximum-minimum range Weighted average US LCFIs  European LCFIs  European LCFIs US LCFIs Major UK banks (b)  Ratio 120  Major UK banks (c)  Ratio 4.5 4.0 3.5  100  3.0  80  2.5  60  2.0 40  1.5  Adj. (d)  1.0 0.5  10  09  0 08  10  2007  09  08  11  Q1  2007  Adj.
In the more recent period, with the enhanced international dimension of Islamic finance, it has become an increasing form of intermediation that has facilitated economic linkages between emerging economies. In addition, it has also drawn the participation by the more established financial centers to forge stronger financial linkages with the dynamic growth regions of Asia and the Middle East. Indeed, this would contribute towards more efficient mobilisation of funds across regions, reinforcing the significance of Islamic finance as an increasingly important channel for a globally more inclusive economic development. In the aftermath of the crisis, Islamic finance will continue to spur new connectivity among nations as its role and relevance gains more significance, thereby contributing to a more balanced global growth. Conclusion In conclusion, it is the very premise on which Islamic finance performs its intermediation function that strengthens its potential role and relevance in advancing the growth and development agenda towards preserving financial stability and towards strengthening economic and financial linkages between nations. By operating in accordance with the rules of Shariah, Islamic finance draws its strengths from its direct link to economic activity and its inherent requirement for prudent risk management and explicit disclosure and transparency thereby ensuring the viability of the activities in generating sufficient wealth to compensate  BIS Review 70/2010  3  for the risks involved. These inherent strengths will continue to be the catalysts driving its transition into a new era of growth and development in this post-crisis world.