subject to the same level of supervisory control as other financial institutions. any breach of standards, practices or application by islamic banks will not only be an obstacle to their services and products, but it will also serve as a hindrance to accepting their services and products by international financial markets. consolidating a bank ’ s financial data with those of all its subsidiaries and branches is another principle that must be applicable to all banks, and such principle is necessary for ensuring consolidated and comprehensive supervision by the supervisory authorities in the bank ’ s home country. central banks'governors in islamic countries, members of the islamic development bank realized the importance of such consolidation 25 years ago when a technical committee was formed, including a number of governors and specialists, of which i was honored to be the chairman, to consider the needs of shari'a compliant banking services. the most important recommendation was that islamic banks must be subject to the same supervisory rules and requirements as those that govern conventional banks, with the necessary flexibility, taking into account their specific work methods and products so as not to isolate these banks from global financial markets. encouraging islamic banking institutions to integrate into global markets will push them forward to compete with all other financial institutions, stimulating them to innovate to meet the needs of corporate and individual customers, expand their scope and base of work, and not to be tied to a specified category of customers or specific markets. this will help them adapt with the requirements of the global financial system, provide them with necessary instruments, helping them develop and reinforce their structures, and facilitate their spread. dear brothers banking business, in all its types and forms, is not free from risks that pose a challenge to banks and supervisory authorities. in this context, islamic banks, like their conventional counterparts, are financial institutions providing services to depositors and investors, on the one hand, and offer financing to companies, public sector and individuals, on the other. therefore, they are subject to many risks that are similar to those confronted by conventional banks. in addition, shari'a compliant banking has its own risks. in principle, there is a range of various activities through which islamic banks can work in different ways that enable them to provide funds. these activities are adapted to meet the principles governing islamic banking business, the most important of which is the principle of risk sharing. therefore, there is an urgent need to identify, measure, manage, monitor and control such potential risks and mitigate them within the capacity and capital adequacy of

hamad al - sayari : islamic banking prudential standards speech by his excellency hamad al - sayari, governor of the saudi arabian monetary agency, to the “ symposium on islamic banking prudential standards ”, institute of banking, riyadh, 15 january 2007. * * * ladies and gentlemen, it gives me a great pleasure to address this honorable and distinguished attendance at this important symposium on “ islamic banking prudential standards ” organized by the institute of banking ( iob ) in cooperation with the islamic financial services board ( ifsb ). the issue of shari ’ a ( islamic law ) compliant banking is increasingly drawing attention of those concerned with financial stability, including international financial institutions such as the imf, world bank ( wb ), development banks, basel committee on banking supervision as well as supervisory authorities in the countries where islamic banks operate. this is the result of rapid growth in the volume and scope of islamic services offered in many countries. those entities have shown a great interest in the growth and expansion of finance business compliant with the principle of avoiding interest and its impact and implications with respect to world markets and the global economic system. currently, shari ’ a compliant banking transactions have spread in most countries of the world through banks that totally comply with shari ’ a or through shari ’ a compliant windows offering all services, investment and commercial activities, leasing, investment funds and joint liability products. the kingdom has been a forerunner country in supporting and encouraging saudi banks to offer such products required by the saudi market. all saudi banks now provide a range of products that are compliant with shari ’ a requirements and with financial engineering specifications of the highest levels under the supervision of well - reputed shari ’ a committees and top class financial professionals. in the context of supporting such efforts, sama ’ s iob has offered many programs, courses and symposia in the area of developing, marketing and supervising shari ’ a compliant products. the number of bankers benefiting from those programs stood at 6, 300 who participated in 374 programs during the last seven years. these endeavors have considerably helped in developing islamic banking in saudi arabia without undermining compliance with islamic shari ’ a or the technical flexibility needed by an emerging and dynamic market. dear audience, it is very important to mention that the industry of islamic financial services should be completely integrated into the global financial markets while maintaining at the same time its distinguished nature and unique services. the industry should also be