Let me now focus my remarks on four major implications of the changing global financial regulatory landscape for Islamic finance – first, particularly in financial systems in which Islamic finance is being developed alongside the conventional financial sector in a dual system environment, (which is the case for most IFSB member countries), there will be a need to ensure that the reforms are undertaken in parallel. The concern is that there would be insufficient attention given for Islamic finance and consequently, the tendency for broad-  2  BIS Review 64/2010  brush application of regulatory measures intended for conventional finance on Islamic finance. In developing the appropriate regulatory framework for Islamic finance, it is not uncommon to leverage on the established wisdoms of prudential regulation for conventional finance to achieve regulatory efficiency particularly in a dual system environment. Whilst it may be envisaged that it is not necessary to reinvent the wheel, it should not override the importance of addressing the specificities of Islamic finance where necessary. Such a prudential regulatory design that takes into account the unique mix of risks associated with Shariahcompliant instruments would enhance the effectiveness of the regulatory outcomes intended for Islamic finance. Although there is already a broad international consensus on the prudential areas that need to be enhanced, different regulatory parameters may be necessary to address the specific risks and unique characteristics of Islamic finance.

There have also been notable achievements in the area of talent development with the proliferation of programmes and certifications which have focussed on Islamic finance offered by several major institutions of higher learning, professional entities, training agencies and industry groups around the world. More recently, platforms for greater engagement among practitioners, scholars and regulators have further added to international collaboration in Islamic finance. And finally, the evolution of Islamic finance in this decade has been marked by its international dimension in which it is becoming an increasingly important part of the global financial landscape. The development of Islamic finance in emerging economies also reflects the changing global pattern of financial and economic integration. This is taking place with the strengthening of financial and economic linkages between Asia and the Middle East and the increased activity of Islamic finance beyond the traditional Muslim countries including the more established financial centres. Cross-border transactions are growing as more issuers  BIS Review 64/2010  1  consider Islamic finance as an attractive alternative means for raising capital, whilst investors are also increasingly considering it as a new asset class in their investment universe. This internationalisation and sustained global expansion of Islamic finance has taken place despite the more challenging environment presented by the global financial crisis, demonstrating the resilience of Islamic finance as a stable form of financial intermediation. Global financial regulatory reforms Ladies and gentlemen, Much has been said and written about the causes of the global financial crisis.