(2021), “It’s not easy being green – but that shouldn’t stop us: how central banks can use their monetary policy portfolios to support orderly transition to net zero”, 21 May; Bank of England (2021), “Options for greening the Bank of England’s Corporate Bond Purchase Scheme”, May. 17. In addition to complying with its mandate as specified in the Treaties, any policy action on the part of the ECB that addresses environmental sustainability concerns must also adhere to the general provisions of EU primary law, including the principles of proportionality, an “open market economy” and institutional balance. 18. See Elderson, F. (2021), “Greening monetary policy”, The ECB Blog, 13 February. 19. See Schnabel, I. (2021a), “From green neglect to green dominance?”, 3 March; Schnabel, I. (2021b), “Societal responsibility and central bank independence”, 27 May. 20. See Schnabel, I. (2021a), ibid; Parker, M. (2018), “The Impact of Disasters on Inflation”, Economics of Disasters and Climate Change, Vol. 2, No. 1, pp. 21–48; ECB and ESRB (2020), “Positively green: Measuring climate change risks to financial stability”, June. 21. The CJEU has recognised that measures that serve the objective of safeguarding an appropriate transmission of monetary policy are likely both to preserve the singleness of monetary policy and to contribute to its primary objective of maintaining price stability. See Case C-62/14, Gauweiler v Deutscher Bundestag, ECLI:EU:C:2015:400, para 50. 22. See Schnabel, I. (2021a), op. cit. 23.

At the centre of the reforms have been the Basel III reform package, principles for riskaligned compensation structures and improving the consistency of regulatory regimes across the different parts of the financial system, including the shadow banking institutions. Significant work is also progressing to strengthen resolution regimes and financial safety nets, particularly in a cross-border context. Given the specificities of Islamic financial institutions, the implementation of these reforms require a careful examination of the different implications that they present for individual institutions and the system as a whole. We are now witnessing wave of the internationalisation of Islamic finance as the role of Islamic finance has expanded to become significantly more globalised. This has resulted in domestic Islamic financial systems to become more inter connected and with the consequence that integrated, risks are more rapidly transmitted across the financial system. Building on the foundations that have been put in place with the adoption of prudential standards introduced by the Islamic Financial Services Board (IFSB) in the key areas of capital adequacy, risk management, corporate governance and Shariah governance, the regulatory, supervisory and legal frameworks will need to reflect the growing cross-border dimensions of Islamic finance and its increased connectivity. Of priority will be efforts to strengthen the cross-border regulatory and supervisory cooperation arrangements in the relevant jurisdictions and to strengthen further the international financial infrastructure for Islamic finance. As we advance forward, this will be of great importance to promote stability and confidence in the more challenging international environment.