is why utmost collaboration and cooperation are required. international organisations and institutions therefore need to play a key role in this area. fourth, the impact of the materialisation of the physical and transition risks of climate change may be very uneven across geographical areas and economic sectors. moreover, apart from this geographical and sectoral diversity, the impact is also likely to be very uneven across economic agents. given these special features, we banking regulators and supervisors have launched various initiatives to assist and oblige banks to take these risks properly into account. thus, the european banking authority ( eba ), 8 the european central bank ( ecb ) 9 and the banco de espana10 have each published supervisory guidelines and expectations explaining how banks are expected to consider these risks in their daily operations, their business strategies see, for example, a call for action. climate change as a source of financial risk, ngfs, april 2019, and climate - related risk drivers and their transmission channels, bcbs, april 2021. eba report on management and supervision of esg risks for credit institutions and investment firms, eba, june 2021. guide on climate - related and environmental risks, ecb, november 2020. banco de espana supervisory expectations relating to the risks posed by climate change and environmental degradation, banco de espana, october 2020. and their risk management. at global level, the bcbs has published for consultation a paper on principles for the effective management and supervision of these risks. 11 in any event, the improvement in banks ’ management capability will presumably have to be supplemented by the development of a regulatory and prudential framework that properly takes into account the special features of the risks associated with climate change. there are two preliminary issues here : the existence of information and common taxonomies and the development of measurement methodologies. the need for common definitions and granular data to assess climate risks correctly, first it is necessary to have common definitions and data of sufficient quality and granularity. the network for greening the financial system ( ngfs ), of which we, among 108 central banks and supervisory authorities from all over the world, are members, published in may 2021 a report12 emphasising the importance of having common worldwide definitions and standards for disclosure of information associated with these risks. common definitions owing to the complexity of the matter, the progress made towards establishing a global taxonomy is, unfortunately, still limited. not only are productive technologies characterised by great heterogeneity at any given moment in time, which affects

united states have been looking at ways of separating the deposit - taking and lending activities of banks from their other operations. and regulators are pressing banks to come up with so - called “ living wills ” – to plan for the possibility that the bank might fail. the greatest progress has, however, been made in writing new regulations. at the end of last year the basel committee on banking supervision published its new capital framework for internationally active banks, known as basel iii. basel iii tries to do several things, but its main aim is to ensure that banks have bigger capital and liquidity buffers, so that they will be less highly leveraged than in the past. when a bank could operate at a leverage ratio of $ 1 of equity to every $ 40 of assets, it was clearly too highly leveraged. it meant that losses of as little as two percent on the bank ’ s asset portfolio could wipe out its entire capital. the basel committee has, rightly in my view, set out to make sure that in future banks will not be able to operate with so little capital relative to their assets. how relevant are these developments to the islamic financial industry? islamic finance has been a relative - newcomer to the globalization trend. the industry itself is still comparatively young, having hardly existed 30 years ago. since then it has recorded impressive rates of growth, but even today ’ s $ 1 trillion industry is still relatively small on a global scale. even so, the global financial crisis has given the islamic financial industry a great opportunity. the obvious flaws in conventional finance have created great interest in the islamic financial model. this should provide the basis for the industry to sustain a period of strong growth for the rest of this decade. the growth opportunities are especially strong as islamic finance has its largest presence in rapidly growing economies that have been least affected by the global financial crisis. they should continue to register high rates of growth in the years ahead. if islamic finance is to make the most of these opportunities, it still needs to learn from the mistakes of interest - based finance. as islamic financial institutions expand, they need to make sure that their management and control functions keep pace with their growth. as the global financial crisis shows, there is a bis central bankers ’ speeches need for firms, especially those that become internationally active, to make sure that risk management, control systems, and it are capable of providing an accurate picture of a financial institution ’ s overall risk profile. boards of directors and senior managers also need to ensure that they