Zeti Akhtar Aziz: Legal & Shariah issues in the Islamic financial services industry Opening remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Third IFSB Seminar on Legal Issues: Surveys on Legal & Shariah Issues in the Islamic Financial Services Industry, Kuala Lumpur, 28 March 2007. *  *  *  Professor William Blair QC, Chairman of the International Monetary Law Committee of the International Law Association (MOCOMILA), Professor Rifaat Ahmed Abdel Karim, Secretary General, Islamic Financial Services Board, Distinguished Guests, Ladies and Gentlemen, I would like to join Professor Rifaat in welcoming you to this 3rd IFSB Seminar on Legal Issues. I would also like to take this opportunity to extend a special welcome to the many of you who have travelled long distances to join us for this important event. Ladies and Gentlemen,  A strong legal and Shariah framework as a pillar to Islamic finance The need to continually strengthen the legal framework for the financial services industry is imperative given the powerful forces of change continually transforming the functioning of the global economy and the international financial system. A legal framework which is aligned with market developments lends certainty and predictability to financial transactions and innovative products and instils public confidence in the financial system. The legal and Shariah framework is a vital pillar in the sustainable development of Islamic finance. It provides the legislative framework that unambiguously defines the conduct of Islamic financial institutions.

In Malaysia, the efforts to enhance the international dimension of our Islamic financial system have been intensified in the more recent period to facilitate greater international trade and cross-border investment flows. The new initiatives that have been announced allow the establishment of new International Islamic financial institutions that will be permitted to offer the full range of Islamic financial services to residents and non-residents in international currencies. These initiatives also aim to serve as a catalyst for the development of the domestic financial markets as well as the development of talent and knowledge in Islamic finance. Collaboration with other emerging regional centres in Islamic finance will be an important part of this process that will contribute towards greater international financial integration. The establishment of the Islamic Financial Services Board in 2002 represents a major structural enhancement in building the international financial architecture for Islamic finance. The achievements thus far by the Islamic Financial Services Board in developing the prudential standards that can be universally applied have been very encouraging. The efforts represent a testimony of the collective capacity for greater international collaboration which has contributed towards strengthening the fabric of Islamic finance. While the legal framework and rules are constantly being reviewed to ensure that they remain relevant for the new areas of financial activity, it should not only be undertaken for the domestic Islamic financial system but also in the context of the international financial system.