kazi abdul muktadir : islamic finance developments in pakistan keynote address by mr kazi abdul muktadir, deputy governor of the state bank of pakistan, at the islamic finance news ( ifn ) roadshow 2012, karachi, 4 september 2012. * * * distinguished guests, ladies and gentlemen! assalam - u - alikum and a very good morning. it is my great pleasure to welcome you all in this ifn road show. i would like to congratulate and thank redmoney for organizing the show in pakistan, which is one of the fastest growing islamic finance markets across the globe. such events not only enhance islamic finance awareness and stimulate its demand but also provide a platform to islamic finance stakeholders to share their experiences and insights about this fast emerging segment of the financial system. i hope that today ’ s discussions and deliberations would help in addressing the key challenges being faced by the industry and contribute towards sustaining the growth momentum. ladies & gentlemen! since the inception of modern islamic finance in 1960 ’ s, islamic banking has evolved from its relatively modest size to a vibrant industry with an increasing global footprint. with a size of us $ 1. 35 trillion ( according to global islamic finance report 2012 ) and annual growth rate of more than 20 percent, the islamic financial industry now comprises 430 islamic banks and financial institutions and around 191 conventional banks having islamic banking windows operating in more than 75 countries. the relative resilience and stability of the industry during the financial crisis and its flexibility and responsiveness to changing business needs has helped the industry to establish itself as a viable financial system. the tremors and aftershocks of the financial crisis are still on either in the form of european debt crisis and / or weakening global economic outlook and the policy makers are still looking for answers to fix these issues. islamic finance, with its roots in a moral economic model that supports productive economic activity and discourages excessive leveraging and imprudent risk taking, can play an important role in rebuilding the financial system. i believe that this is high time for islamic economists and scholars to highlight the inherent strengths and potential of islamic finance in addressing the existential challenges faced by the global financial and economic systems. ladies & gentlemen! the evolution of islamic finance industry in pakistan has followed the same trajectory as global islamic financial industry ; with growth mainly intensifying over the last decade. despite having introduced landmark changes during 1980s including amendment in the banking companies ordinance, enactment of mudaraba companies and

www. federalreserve. gov / newsevents / speech / brainard20210113a. htm ; and lael brainard ( 2021 ), “ how should we think about full employment in the federal reserve's dual mandate? ” speech delivered at the ec10, principles of economics, lecture, faculty of arts and sciences, harvard university, cambridge, mass. ( via webcast ), february 24, https : / / www. federalreserve. gov / newsevents / speech / brainard20210224a. htm. - 3workers in the lowest - wage quartile continued to face staggering levels of unemployment of around 22 percent in february, reflecting the disproportionate concentration of lower - wage jobs in services sectors still sidelined by social distancing. 5 the leisure and hospitality sector is still down almost 3. 5 million jobs, or roughly 20 percent of its pre - covid level. this sector accounts for more than 40 percent of the net decline in private payrolls since february 2020. overall, with 9. 5 million fewer jobs than pre - covid levels, we are far from our broad - based and inclusive maximum - employment goal. inflation similarly remains far from the goal of 2 percent inflation on average over time. both headline and core pce inflation were below 2 percent on a 12 - month basis throughout 2020 and came in at 1. 5 percent in january. finally, while vaccinations are continuing at an accelerating pace, over two - thirds of the adult population have yet to receive their first dose, and there are risks from more contagious strains of the virus, social - distancing fatigue, and vaccine hesitancy. 6 outlook as the economy reopens, the potential release of pent - up demand could drive stronger growth in 2021 than we have seen in decades. however, it is uncertain how much pent - up consumption will be unleashed when social distancing completely lifts, and how much household spending will result from the new stimulus and accumulated savings. with pce accounting for roughly 70 percent of the economy, this uncertainty about consumption spending contributes to uncertainty about activity, employment, and inflation. for more information on this analysis, see the box “ disparities in job loss during the pandemic ” in board of governors of the federal reserve system ( 2021 ), monetary policy report ( washington : board of governors, february ), pp