at international level can be improved through a clear assignment of representatives. part ii how the bcl envisions and implements liquidity surveillance the 2008 bcl mandate to monitor the liquidity of markets and market operators recognizes central banks ’ unique role in the surveillance of systemic liquidity risk. the crisis demonstrated that liquidity risk can emerge quickly. the manner in which liquidity risk materializes and is transmitted is determined by the nature of funding instruments and linkages among financial institutions, the degree of leverage of market operators, as well as their reactions to emerging stresses. policy responses to the crisis must, at a minimum, enhance institutions ’ liquidity risk management and information available to measure and track systemic liquidity risk. the task is complicated because the assessment of liquidity risk at the systemic level is often susceptible of a fallacy of composition given that the viability of banks ’ individual approaches to liquidity risk will depend upon the strategies being pursued by other market operators. for instance, if banks have a great deal of interconnectedness via the interbank market, a liquidity shock impact will be relatively larger than if their interconnectedness was lower. in addition, if banks ’ business models were diverse, the impact of a liquidity shock would be relatively smaller than if banks ’ activities were concentrated on just one business line. the 2008 law, in giving to the bcl the mandate to monitor markets and market operators ’ liquidity, acknowledged the necessity of liquidity surveillance in luxembourg. on this capacity, the bcl has issued regulations, such as the bis central bankers ’ speeches bcl regulation 2009 / 4 requesting banks to apply the bcbs “ principles for sound liquidity risk management and supervision ”. the bank actively participates in the shaping of the basel iii framework for liquidity risk measurement, standards and monitoring. taking due account of current regulatory developments, the bcl intends to publish further instructions to market participants on liquidity management before the end of this year. in the same way the bcl changed its architecture to comply with its liquidity surveillance mandate, it will also adapt to its unavoidable role in macroprudential policymaking in luxembourg. following the 2008 new mandate on liquidity surveillance, the bcl adapted its internal structure and resources so as to ensure that the luxembourg market and its financial actors are constantly subject to analytical and quantitative scrutiny so as minimize systemic liquidity risk in the luxembourg financial industry. the bcl has increased technical cooperation with regulators at the national and international level and

treasury to issue luxembourg sukuk, but the volume would be symbolic in international comparison. on the operational side, clearstream banking, the luxembourg international central securities depository ( icsd ) holds under custody and offers the clearing and settlement of a range of islamic securities. it has slightly adapted its technical processes to sukuk ’ s requirements as regards the distribution of payments. earlier this year, deutsche bank announced the launch of a new platform " al mi'yar " whose aim is to facilitate the issuance of shariah compliant securities. this platform is domiciled in luxembourg. it is also worth mentioning that several local market practitioners and support entities ( mainly law firms and investment funds service providers ) are expanding to the gulf region. competition for the global lead in the investment fund industry has attracted expertise in domiciliation, administration and distribution of investment funds to luxembourg, including shariah compliant investment funds. working groups encompassing authorities and market players were set up to find out how to remove barriers to the development of islamic finance products. our national agency for the development of the financial centre “ luxembourg for finance ” has issued a leaflet which is used during promotional trips to explain the islamic finance opportunities in luxembourg. a 2 - day conference is planned for early may to disseminate awareness and knowledge within the banking and funds industry 35. the bcl participates together with other public authorities in a working group, chaired by the ministry of finance, on the promotion of islamic finance in luxembourg. the luxembourg school of finance and the university of luxembourg offer modules of islamic finance in their master programmes. see, bataineh sufian & carole, la finance islamique : opportunites et challenges pour le grand - duche de luxembourg, to be published in a forthcoming bulletin of the association luxembourgeoise des juristes de droit bancaire. see, islamic finance awareness days, agenda 2009, http : / / www. alfi. lu /. in reality, practitioners in luxembourg consider that our current legal framework is compatible with islamic insurance products and islamic finance products. it already allows the issuance of such products – differences between conventional investment funds and islamic funds are considered minimal. however, full islamic banking would request adjustments 36. the most appropriate structural category for islamic funds is the “ specialized investment fund ” ( fonds d ’ investissement specialise – sif ) which is targeted at well - informed investors. in addition, this structure is legally easier to establish and it