A decade on, the work of the IFSB in ensuring a cohesive cross-border regulatory framework and the international best practices that are attuned to the intrinsic characteristics and peculiarities of Islamic financial intermediation, have served to underpin the development of a sound and stable Islamic financial system, ushering in a phase of rapid growth and greater internationalization of the industry. Indeed, 10 years since the founding of the IFSB have been a period of significance, during which the Islamic financial services industry has grown impressively with its landscape dramatically evolved. This growth acceleration has been accompanied by the widening of its geographical reach transcending its traditional borders in Muslim majority countries to the more established financial centres. In addition, Islamic finance has evolved as a comprehensive system of intermediation servicing all segments of society, including governments, businesses and households regardless of scale of businesses and income levels. In this decade, Islamic finance has also evolved from being domestic-centric to become increasingly internationalized, intermediating funds across borders and becoming a new vehicle that bridges economies and fostering closer financial linkages, particularly among emerging and developing markets. As a form of financial intermediation that is well anchored to serve the real economy, Islamic finance offers distinct potential to achieve the goals of inclusive growth and financial stability. Its foundations have been strengthened with the setting up of the IFSB and before that, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), have taken the lead in setting the prudential and accounting standards for the industry.

Svein Gjedrem: Risk and growth in the financial industry Speech by Mr Svein Gjedrem, Governor of the Central Bank of Norway, at the Annual meeting of the Norwegian Savings Banks’ Association, Bergen, 27 October 2005. The speech does not contain assessments of the economic situation or the monetary stance. Please note that the text below may differ slightly from the actual presentation. The charts in pdf-format  can be found on the Central Bank of Norway’s website. References can be found on the Central Bank of Norway’s website. *  1. *  *  Introduction  Over the past decades, debt and financial assets have risen sharply worldwide. The financial system serving lenders and borrowers has also expanded. The number of participants in these markets has soared, some new operators have appeared and a broad range of instruments has emerged. Growth in financial markets provides the basis for more efficient use and distribution of capital and for improved risk management. Developments in the financial industry have thus contributed to stronger and more stable economic global growth over the past decades. New instruments have increased banks’ possibilities of managing risk, among other things credit risk associated with lending. In many countries, growth in household borrowing has been high for several years. In Norway, mortgage loans account for an increasing share of banks’ balance sheets. I will now discuss different aspects of this. 2.