Limited losses on subprime loans ultimately led to the destruction of millions of jobs throughout the world, and the links between finance and the real economy were cruelly laid bare. ii)  But finance can certainly not be considered “all powerful”: in my opinion, the world of finance only has the political power that State governments choose to give it. •  Granted, the difficulties some countries were facing, notably in the euro area, were exacerbated by financial market pressures – think back to the attacks on Italian debt in the summer of 2011. But if the markets were able to exert this pressure, it was because those countries had, in a sense, put themselves at their mercy by demanding that they finance their ever-expanding public deficits, even during periods of growth. •  In nearly all the crises faced by the euro area since 2009, it is true that market reactions were often brutal and even extreme. But these reactions were frequently based on legitimate fears: for example the sustainability of Greek debt, weaknesses in the institutions of monetary union and divergences in competitiveness between euro area Member States. Again, it was by failing to make the necessary efforts (to ensure budget discipline, preserve competitiveness or finalise the institutions of a European financial union, for example) that these countries put themselves in a position to be rushed or even pressured by the markets and bear the consequences of their overreaction. Governments should not use finance as an alibi or as a scapegoat.

The establishment of the Islamic Financial Services Board (IFSB) in 2002 to set the prudential standards for Islamic finance, and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) established in 1990 has been key to ensuring the soundness and stability of the Islamic financial system. The IFSB and AAOIFI have had an important role in the harmonisation of prudential and accounting standards across the different jurisdictions. They are also instrumental in instituting international best practices in the global development of Islamic finance. The Islamic financial institutions are also subject to the requirements on anti-money laundering and anti-terrorist financing. Opportunities through greater international financial integration The globalisation of Islamic finance has gained significant momentum in this recent five years. While the early development of Islamic finance was domestic centric, its internationalisation is now manifested by increased cross border flows, greater participation in international Islamic financial markets, the increased presence of financial institutions in new jurisdictions and more recently, the increased number of Islamic financial institutions which have shareholders from multiple jurisdictions. Greater financial integration has essentially been facilitated by the more rapid pace of liberalisation that has been supported by the progress that has been achieved in the development of the international Islamic financial infrastructure. This trend has also been prompted by the need for greater diversification of risks in the management of funds. In the current international financial environment, this trend has become more pronounced prompting investors to consider other asset classes and markets that provide stability.