The Islamic Financial Services Board or IFSB, established in 2002 as an international prudential standard setting body for Islamic finance, now has a membership of 50 regulatory authorities. It has developed prudential standards ranging from capital adequacy requirements to standards for governance and risk management. There has also been the development of degree programmes and professional qualifications in Islamic finance that are now being offered by major institutions of higher learning and training organisations from around the world. More recently, conscious efforts to initiate platforms for greater engagement among practitioners, scholars and regulators have brought about greater convergence and standardisation of Shariah interpretations and thus enhancing the potential for product harmonisation which has in turn supported greater cross border transactions in Islamic finance. BIS Review 95/2010  1  Challenges faced by the Islamic financial industry During this same decade, despite enjoying rapid growth, Islamic finance has also experienced its most challenging period. Today we face an environment of financial uncertainties and economic turmoil. The global economy and international financial system has been shaken by a series of unprecedented financial meltdowns in the international environment. Much has been said and documented about the financial mess that the crisis has created. Unprecedented policy responses were initiated to stabilise conditions. Now, significant steps are being taken by the international community to reform and strengthen the international financial system. The aim is to build the foundations for a stronger international financial system and global economy that is built on the premise of sustainable growth and a greater shared prosperity.
An important aspect of the recent developments to strengthen Islamic financial services industry is that this is being undertaken during the stable and good times. This will position Islamic finance to deal with future challenges. A clear indication of that is the growing relevance and importance of the sukuk market. This event in Kuala Lumpur is commemorating the talent, expertise and the successes of the Islamic financial community. BIS Review 95/2010  3