There are two reasons for this: the size and the international orientation of the financial industry. First, the financial industry makes up a large share of gross domestic product (GDP) in Switzerland – larger than in other rich nations. For example, at its peak in 2007, the financial industry contributed around 13.5% to GDP in Switzerland, compared to just 8% in the US, 7.5% in the UK, and less than 5% in Germany 1. In countries with large financial industries, households and non-financial companies generally rely more on external capital. Consequently, in these nations, shocks to the financial system have larger output effects. The financial industry’s considerable share of GDP thus implies that shocks to the financial system potentially have more substantial effects on the real economy of Switzerland than in other countries 2. Second, parts of Switzerland’s financial industry are very internationally oriented. In the aggregate, around half of the entire value added by banks in Switzerland stems from  1  Source: OECD, Structural Analysis Database. 2  This has been documented empirically by Levintal (2009), who shows that the effects of fluctuating bank profits on GDP growth are related to the size of the financial industry as a share of GDP; Kroszner, Laeven and Klingebiel (2007) find that bank crises have more pronounced real effects in countries with a higher ratio of loans to GDP. 2  BIS central bankers’ speeches  business conducted with foreign customers. Over half of all assets under management by Swiss banks come from foreign customers 3.

With Shariah scholars at the forefront of multi-disciplinary knowledge, the Shariah fraternity can play a more prominent role in the global call for action for the financial sector to better respond to the contemporary challenges facing our world today. Closer engagement with wider stakeholders, be it the financial industry, regulatory authorities, central banks and the public sector, has never been more pressing than before. It is the way forward. It is the way to ensure that the Islamic finance industry continues to be able to deliver on the intended objectives of Shariah. 1/2  BIS central bankers' speeches  Transparency of Shariah rule-making My second point relates to the importance of transparency of Shariah reasoning and credibility of Shariah rulings. This will encourage a deeper understanding of Shariah requirements and outcomes beyond a compliance mindset. Pronouncing a clear and comprehensive hukum is certainly not easy; Shariah deliberations would need to be anchored to a comprehensive and robust decision making approach that captures holistic considerations including legal, risk, accounting, operations and also stakeholder implications. It is equally important that Shariah rulings are well-understood by everyone. This calls for an effective communication strategy to advocate the intended outcomes of each rulings and the underlying reasons for each decisions. Platform such as this gathering – offers all of us the opportunity to learn and exchange views from each other’s experiences. Best practices in Shariah methodology and governance can be shared and deliberated to elevate the quality of rulings and stature of Shariah advisory authorities globally.