While such a divergence of opinions in Islamic financial transactions is not a new phenomenon, it has presented a new set of challenges in today's increasingly more globalized market. To forge closer linkages between the global Islamic financial markets would require a common understanding and acceptance on the applicable rules and standards. Indeed, cross border transactions would require the jurisdictions involved to mutually recognise the validity of respective rules, practices and underlying Shariah interpretations. This is key for the orderly development and for advancing the pace of progress of the international Islamic financial industry. For this, it is important to have a concerted effort in providing greater clarity on the mutually acceptable strategy for the development of global Islamic finance. In the current globalised environment, the role of scholars needs to transcend beyond pure advisory or Shariah rulemaking, to a more strategic role in charting industry development. This could be in part be achieved by having global Shariah standards for the Islamic financial industry. A mutually agreeable position could be achieved with the application of mutually recognized principles and processes to deduce the Shariah rulings and views. 1  1  There are lessons to be drawn from the previous success stories in the history of Islamic jurisprudence whereby the strong sense of mutual respect prevailed among Muslim jurists with multiplicity of Shariah opinions. The jurists from different mazhab had high regard for differing views expressed by other jurists, even in ibadah matters.

This is derived from the Shariah principles, the key pillar of Islamic finance. The Shariah injunctions require that Islamic financial transactions be accompanied by an underlying productive activity resulting in a close link between financial and productive flows. Under the risk sharing concept, there is an explicit risk sharing by the financier and the customer. In this arrangement, the real activity is expected to generate sufficient wealth to compensate for the risks. Parties to the transactions would thus be insulated from excessive risks exposure given that the Shariah prohibits the excess leverage and involvement in speculative financial activities. The intrinsic principle of profit and risk sharing thus provides an in-built check and balance to the Islamic financial transactions. A combination of these distinct features together with the implementation of prudential risk management standards and practices would contribute to the robustness and resilience of Islamic financial system. Mutual respect on Shariah matters This decade has thus been a phase of innovation in the global Islamic financial system with a number of breakthroughs and major milestones in innovative deals and structures. The advancement of sukuk, Islamic securitization, Islamic private equity, Islamic real estate investment fund and other financial instruments in terms of sophistication and product range has widened the international market reach of Islamic finance, particularly in the cross border transactions. At the same time, this phase is also seeing a number of key issues being raised, particularly in respect of divergence of Shariah views underlying a number of the Islamic financial transactions.