rasheed mohammed al maraj : towards the next phase of growth for islamic banking and finance – a new paradigm for asia and the middle east opening remarks by he rasheed mohammed al maraj, governor of the central bank of bahrain, at the 1st annual world islamic banking conference : asia summit 2010, singapore, 14 june 2010. * * * your excellencies, ladies and gentlemen : i should like to thank his excellency minister lim for his kind words of introduction and his excellency heng swee keat, managing director of the monetary authority of singapore for his kind invitation to participate in this landmark event. the world islamic banking conference has become an established part of the calendar in bahrain. last year ’ s conference was the 16th to be held in the kingdom. 2009 also saw the wibc broaden its scope with its first european summit which was held in london. the present summit, the first of its kind to be held in asia, is evidence of the growing geographical scope of islamic finance which has emerged from being a niche industry to one that has moved into the financial mainstream. the choice of singapore as the host for the wibc ’ s first asian summit marks a further step in the globalization of islamic finance. singapore ’ s historical role as a bridge in the trade routes linking arabia, south asia and south east asia make it an appropriate venue for such a summit. moreover, with its strong infrastructure and reputation for sound and transparent regulation i am sure singapore will have an increasingly important role to play in the future development of islamic finance. the theme of this session is the next phase of growth for islamic banking and finance. the current phase has certainly been very impressive. from its beginnings a little over 30 years ago, islamic finance has grown to become an industry – according to some estimates – which amounts to one trillion dollars in assets. retail banking has been a particularly strong driver of the industry ’ s growth. interest in islamic finance has spread from the middle east and south east asia to europe, russia, the central asian republics, china, and africa. islamic finance is now a genuinely global phenomenon. in bahrain we have seen a similar pattern of strong growth. since first licensing bahrain islamic bank in 1978 the sector has grown dramatically. by the year 2000 the assets of the islamic banks had reached two billion dollars. last year they stood at 26 billion dollars. the market share of islamic banks has increased from 1. 8 percent of total banking assets to over 11 percent in the same period

rasheed mohammed al maraj : prospects for the islamic financial industry against the background of the current global financial turmoil keynote address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the aaoifi - world bank annual conference on islamic banking and finance, manama, 10 november 2008. * * * distinguished guests, ladies and gentlemen : it is a pleasure to participate in the opening ceremony of this conference and in the graduation ceremony for the “ certified shari ’ a adviser and auditor ”, and “ certified islamic professional accountant ’ programmes. in addition to congratulating the graduating students, i should like to thank the many distinguished speakers who will be appearing during the conference, as well as the event organisers. particular thanks are due to the world bank for their support for this event. against the background of the current global financial turmoil, it appears good time to take stock of the prospects for the islamic financial industry. in recent months, as the global financial crisis has deepened, there have been many commentators who have pointed to the relative success of the islamic financial sector. so far, islamic financial institutions have escaped relatively unscathed from the severe downturn which is affecting most conventional financial institutions. this certainly presents the industry with an opportunity to continue its successful growth of recent decades. because interest - based transactions are prohibited, islamic finance encourages business and trade activities that generate fair and legitimate profit. the prohibition on speculative activity also helps to ensure that there is a close link between financial flows and productive activities. these intrinsic properties of islamic finance contribute towards insulating it from the potential risks resulting from excess leverage and speculative financial activities. but while islamic financial institutions have been largely sheltered from the present crisis, there is no room for complacency. it is inevitable that they will be affected to some degree, as they are part of the wider global economic system. the effects of the global financial crisis on the real economy has the potential to transmit shocks to shari ’ a compliant institutions as well. this means that there must be a very high priority placed on sound management and risk management practices at islamic financial institutions. as i have pointed out in the past, the sensational growth of the industry in recent years, combined with high levels of liquidity, has meant that islamic banks have not needed to fight for funding or ideas. new entrants to the industry have merely tended to copy the strategies they see being successfully pursued by their more established rivals. as a