Today, the sukuk market has become an important avenue for international fund raising and investment activities with the sukuk becoming a truly global product, generating significant cross-border financial flows. The internationalization of Islamic finance is also evidenced by the growing presence of Islamic financial institutions that now operate beyond their own jurisdictions and the increased number of international foreign financial institutions that offer Islamic financial products and services. Indeed, increasingly, Islamic finance has become part of the growth strategies of a growing number of the global financial players. In addition, the traditionally domestic-focused Islamic financial institutions are now venturing abroad. These developments have resulted in the increased international participation in Islamic financial markets. New horizons are also fast emerging, as seen by the concrete efforts for legislative  BIS Review 140/2010  1  and regulatory changes in several non-traditional markets to facilitate the introduction of Islamic finance in these markets. The rapid internationalization in Islamic finance has also been underpinned by the massive flow of knowledge, ideas, technology and people across borders, a process which fosters a greater international understanding on the practices in Islamic finance. This is taking place through the strong international cooperation in the area of human capital development and the development of global ancillary service providers that specialize in Islamic finance. This has resulted in the proliferation of programmes and certifications that focus on Islamic finance around the world and the development of Islamic indices, information repositories, and the provision of professional consultancy services.

An important development in this decade has been the growing significance of the international dimension of Islamic finance and its increased role in the international financial system. Islamic finance has, during this period, been expanding steadily at a double digit pace of growth. The total Islamic financial assets size is estimated to be more than $ trillion. Such dynamic growth has been driven by two key factors: firstly, the pace of innovation in Islamic finance has been able to provide the extensive range of financial solutions to households, businesses and governments with attractive pricing and innovative structures; and secondly, the resilience derived from its inherent features which has provided the foundations for financial stability in the Islamic financial system. The advancement that has been achieved in the sukuk market in particular, testifies to the ability of Islamic finance in meeting the requirements of today’s differentiated demands of the modern economy. The Sukuk epitomises the very ingenuity in Islamic finance. This important segment of Islamic finance has seen a dynamic stream of cutting edge products and structures. Sukuk is distinct in its role as a platform upon which international inter-linkages are fostered. The sukuk market has demonstrated its ability to effectively intermediate funds across borders and thus contribute towards the efficient allocation of funds in the international financial system. On the supply side, it has drawn the participation from corporations, sovereigns and multilateral agencies. On the demand side, it has now become part of mainstream asset allocation strategies for investors seeking greater risk diversification.