I should however be clear about one extremely important caveat in this process of adjustment and about something that seems to be often misunderstood. The risk appetite of the Bank of England – both as macro and as micro prudential regulator of the UK banking system – has not changed. The financial crisis led to a reassessment of our tolerance to risks that could jeopardise financial stability. It brought home that systemic financial crises were not something that only happened in history books and in emerging economies. We learned they were both possible and indeed even more explosive and damaging in modern, advanced economies and in their interdependent financial systems. And we learned the costs to the real economy when financial stability is lost. GDP per person in the UK is barely above its pre-crisis level. This reassessment both of the probability and of the cost of damage to financial stability is the foundation of this unprecedented reform programme. As we learn how the new regulatory framework operates through the credit cycle we may, nay will, adjust – in any direction – reforms that are not operating as intended. We will do this in consultation with the industry and other stakeholders – the Open Forum on financial markets which the Bank of England will hold on 11 November is an example of this process. But, as the memories of the crisis fade, as they inevitably will, we will not reset our underlying tolerance of risks to financial stability. There is no “back to future”.

This committee comprised members from among key government stakeholders, including the Attorney General’s Chambers as well as industry players and experienced Islamic finance legal practitioners. We are also pleased to announce the appointment of Tun Abdul Hamid bin Mohamad, the former Chief Justice who is also a member of our Shariah Advisory Council, to chair this committee. We will be engaging with the industry and general public for feedback on the laws which require harmonisation. Further details will be announced in due course. The underlying objective in having this Law Harmonisation Committee is to position and strengthen existing laws as the laws of choice for Islamic financial transactions. It is also consistent with our objectives to create an enabling environment that facilitates and accommodates the development of the industry, a clear and efficient system that preserves that enforceability of Islamic financial contracts and a credible and reliable forum for settlement of legal disputes arising from Islamic financial transactions. The support provided by the legal fraternity to Islamic finance has been instrumental to the progress of the industry. Crafting legislation to facilitate the growth and development of Islamic finance requires dedication and skill, and the ties that have since developed between lawyers, regulators, Shariah scholars and industry practitioners, have inevitably blossomed into a strong relationship based on mutual understanding and close co-operation. Going forward, it remains crucial for this close collaboration to continue so that more pioneering progress can be achieved in paving the way towards greater international integration and expansion of the Islamic finance industry.