total assets of less than £xb and who are also : not systemically important ; 6 in fact, the financial services and markets act 2000 ( as amended ) is explicit that it is not our role to ensure that no firm fails. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice not internationally active ; not involved in trading activities ; not approved to run an internal model for capital requirements ; and capable of exiting the market in an orderly way, for example through solvent wind - down or an insolvency procedure. now i ’ m quite sure that our disgruntled bank chair will be spluttering over their coffee at one or other of the items i just listed. indeed each of these elements could be hotly debated, and doubtless will be if we proceed to a consultation. for example, what should the “ x ” in “ £xb ” be? on the one hand it would be good to have as many firms as possible benefit – but on the other hand, as “ x ” gets higher the scope to simplify will probably diminish. and to give you a sense of the distribution, out of the pra ’ s current population of 110 uk deposit - takers a cut - off of £1b would capture 48 firms, £5b 78 firms, £10b 84 firms, £20b 91 firms and so on. of course in thinking about these thresholds one immediately runs into two issues. first, the barriers to growth problem – by creating a new step in the regime we might add to the difficulty of growing. one solution to this could be to make the simple regime optional – firms that have no great ambitions to grow could opt in, while those who want to become large and prefer to get to grips with the whole regime early could opt out. second, those firms who don ’ t meet the definition might feel hard done by and lobby against it, or lobby for other changes which make the overall regime less strong. there is no avoiding this, other than to appeal to the greater good. the second design question is how to simplify. there are two main options, which are not mutually exclusive : replace existing requirements with simpler versions ; and / or narrow the set of applicable requirements. on the first of these options, we would want to look at which requirements the smallest firms find the most complex. for example, if it turned out that small

shamshad akhtar : islamic finance – its sustainability and challenges closing keynote address by dr shamshad akhtar, governor of the state bank of pakistan, at georgetown university, washington dc, 18 october 2007. * * * introduction in the closing session for this event on islamic finance, i propose to reflect on the growth and trends in islamic finance, its size and dimensions and prospects which are now evolving from regional to global scale and impacting the private capital flows. the renewed interest and hype in islamic finance is unprecedented. since it coincides with commercial interest of western financial institutions to attract flows generated from oil revenues and other savings, there is a degree of skepticism regarding sustainability of interest and trends in islamic finance industry within and outside muslim jurisdictions? also there are concerns echoed on whether the industry will persevere the competition from the global financial world nurtured by the conventional system backed by strong legal, policy, regulatory and institutional framework. in my assessment, the islamic finance now seems to be a reality and is on its way to be institutionalized, albeit at different levels in different countries, and the western world is also now selectively and cautiously positioning to invest in this system. there are promising signs that islamic finance trends are sustainable. it is entrenched in a well conceptualized islamic economic system whose mysteries are being unfolded with renewed academic interest in the subject. while undeniably faith driven, the islamic finance system has great potential to meet the financial gaps and requirements of development and society at large and as such its demand would be robust going beyond religious grounds. islamic finance has to be recognized as a parallel system which will augment and be augmented by the deeper knowledge and experience of the conventional financial system. as such, the key challenge going forward to its growth and sustainability would lie in how it interfaces and benefits from complementing and supplementing the conventional system and how it adapts and conforms to the international regulations and supervision adequately refined in line with the technicalities and nuisances of the islamic financial instruments and their associated risks. exploiting properly the unique features of islamic finance with appropriate adaptability, without compromising shariah principles, will be critical to the growth and promising future of islamic industry. touching on some of these debates, i propose to first discuss the trends in islamic finance, lay the case for sustainability of islamic finance and finally discuss some of the key challenges facing the industry which the islamic financial community at large is now trying to address. global and regional