haruhiko kuroda : international financial regulation and supervision - past achievements, current issues, and future agendas remarks by mr haruhiko kuroda, governor of the bank of japan, at the 2019 paris europlace international financial forum, tokyo, 28 november 2019. * * * introduction i am very honored to have the opportunity to speak at the paris europlace financial forum again this year. this is a valuable forum for exchanging ideas on interesting topics such as global financial regulation, financial innovation, and esg, which are featured today. the forum also plays an important role in promoting paris as a financial center. turning to tokyo, there is an ongoing effort to realize “ tokyo ’ s vision for a global financial city ” and mr. nakaso, who appeared as a speaker earlier today, is leading this effort as chairman of the organization of global financial city tokyo. i think this is a valuable opportunity for interaction between the global financial centers of tokyo and paris. over the past three years, i have talked about future challenges, such as financial innovation and demographic changes. this year, i will change focus slightly and look back on the discussions on regulation and supervision in the wake of the global financial crisis, and then discuss issues that are currently of particular importance. i would also like to touch on issues that are likely to increase in importance in the future. i. past, present, and future of international financial regulation and supervision since the global financial crisis, financial institutions around the world have increased their capital adequacy ratios under new international financial regulations, such as basel iii. these regulations have been discussed and formulated by authorities worldwide and have helped increase the robustness of the global financial system. however, looking back on history, financial crises have repeatedly occurred in different forms, often with the advent of new financial technologies. as we are not crystal gazers and cannot foresee the future completely, we need to identify risks to the financial system in as forwardlooking a manner as possible. based on a deep understanding of our past experience, we must monitor the progress of new financial innovation and changes in the environment surrounding financial institutions. we then need to design international financial regulations so that any risks identified do not lead to the next financial crisis. even after global financial regulations have been carefully formulated and implemented, their effectiveness may be impaired by progress in financial technology and changes in the business environment. there is also the risk of unintended negative side effects that may demand further intervention

witnessed the establishment of its first islamic commercial bank. islamic finance extended quickly to other parts of the world, most of which during the past thirty years or so. other maghreb countries, morocco and tunisia began the experience of islamic finance by allowing conventional banks to offer certain islamic products but these institutions are faced with strong competition from the region ’ s conventional banks. remarkably, sudan only established its first sharia - compliant bank in 1977 and the country ’ s islamic economic system has since then been continuously developing. sudan is the only country in this part of the world to have a wholly islamic financial sector. within sub - saharan africa, south africa led the way, with one of the largest international islamic banking conglomerates namely al - baraka banking group having been present there for the last 20 years alongside other institutions conducting islamic finance in the country. more recently, other countries have joined the league namely kenya, tanzania, botswana and nigeria. governments of ghana, uganda, ivory coast, somalia, malawi and zambia are working towards introducing islamic banking in their respective countries. presently, the african continent hosts over 250 islamic financial institutions that offer islamic financial services including islamic banks, takaful companies, islamic funds, mudarabahs and islamic microfinance. noteworthy also is that over the last two years, the african continent has demonstrated interest in creating an islamic capital market via initiatives for issuance of sovereign sukuks in a few countries including nigeria, kenya, south africa and senegal. as of date, two countries have successfully issued their soveriegn sukuks namely sudan and gambia. the rapid pace of the development of islamic finance leaves no doubt among policy makers all over africa including mauritius that islamic finance presents many prospects for development. considering africa ’ s population of nearly one billion people, half of which are of muslim faith, and the numerous hurdles to financial access on the continent, islamic finance could become a key factor in the promotion of financial inclusion by appealing to a large muslim population in certain parts of africa. the mauritian experience ladies and gentlemen, over the past three years, the mauritian authorities took some initiatives towards the promotion of islamic banking and finance in our jurisdiction. bis central bankers ’ speeches • the banking legislation has been amended to enable banks to conduct islamic banking business exclusively or through a window ; • fiscal reforms were brought in to eliminate tax disadvantages that would otherwise have materialised in the islamic mode of finance ; • we joined the ifsb to facilitate the rapid development of islamic