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.

Combined with continuous capacity building initiatives and institutional development, it has resulted in the opportunity to achieve scale and has allowed the Islamic financial services industry to transition into a dynamic, fast growing and competitive form of financial intermediation for the global community. The IFSB today is celebrating its tenth anniversary in a world which is changing profoundly. A new growth and development agenda is unfolding before us. Given the severe damage and devastation caused by the global financial crisis and the ensuing economic downturns, the road to an enduring recovery and lasting prosperity demands a global policy response that brings about a new economic trajectory built on a strong, more inclusive and more sustainable growth path. Common challenges that have also come to the forefront, such as poverty, increasing inequality and the imperative for greater social cohesion, have also called for the construction of policy objectives and strategies that can enhance stability, social well-  BIS central bankers’ speeches  1  being and environmental sustainability. In the wake of the global financial crisis, there is consensus on the need for a return to financial systems that serve the real economy, and the demands for more responsible financial practices from the financial sector, that also includes the commitment to achieve socio-economic goals. In response, the international community is prioritizing financial stability by strengthening financial regulation. This includes financial reforms aimed at protecting depositors from excessive risk-taking, over-leveraging and unfettered innovation.