european firms to non - european firms, even as the total proportion of u. s. lending accounted for by foreign banks has remained roughly constant in the last few years. fr y - 9c, ffiec 002, fr 2886b, ffiec 031 / 041, fr y - 7n / s, x - 17a - 5 part ii ( sec form 1695 ), and x - 17a - 5 part iia ( sec form 1696 ). dodd - frank wall street reform and consumer protection act, pub. l. no. 111 - 203, 124 stat. 1376 ( 2011 ). sections 165 and 166 apply to all foreign banks with $ 50 billion or more in global consolidated assets and a u. s. banking presence of any size. more than 100 foreign banks operating in the united states would meet this threshold today ( source : fr y - 7q ). whether such a bank with relatively small u. s. operations should be subject to the same prudential requirements as those with u. s. operations in excess of $ 50 billion is an open question. sec focus reports. bis central bankers ’ speeches international and domestic regulatory response since the crisis, important changes have been made to strengthen international regulatory standards. the basel iii capital and liquidity frameworks are big improvements, and the proposed capital surcharges for systemically important firms will be another important step forward. but these reforms are primarily directed at the consolidated level, with little attention to vulnerabilities posed by internationally active banks in host markets. the risks associated with large intra - group funding flows have remained largely unaddressed. managing international regulatory initiatives also has become more difficult, as the number of complex items on the agenda has increased. and despite continued work by the financial stability board, challenges to cross - border resolution are likely to remain significant. for the foreseeable future, then, our regulatory system must recognize that while internationally active banks live globally, they may well die locally. quite apart from the need to act pragmatically under the circumstances, it is not clear that we should aim toward extensive harmonization of national regulatory practices related to foreign banking organizations. the nature and extent of foreign banking activities vary substantially across national markets, suggesting that regulatory responses might best vary as well. for instance, the importance of the u. s. dollar in many international transactions can motivate foreign banks to use their u. s. operations to raise dollar funding for their

. some of these reform proposals have attracted intense international debate generating divergent views on these issues. a broad consensus however is emerging on the need to raise both the quantity and quality of regulatory capital, strengthen liquidity rules and improve market transparency. there also seems to be agreement for the extension of regulatory tools to address pro - cyclicality in the financial system through the creation of counter - cyclical capital buffers, dynamic loan - loss provisioning and greater alignment of incentives with long - term goals. this consensus reflects the objective of avoiding having incentives that would encourage the material build - up of leverage and the excessive appetite for risk. other measures under consideration include the implementation of non - risk - based leverage limits to contain the build - up of leverage in the banking sector and the strengthening of the supervisory framework and the arrangements for dealing with oversight on crossborder financial groups and for resolution. implications for islamic finance islamic finance does not exist in isolation and as it becomes an increasingly important component of the global financial system, it will inevitably be impacted by the changing global landscape of financial regulation. this is particularly the case as its growth gains momentum both in terms of number of services providers and in terms of business volume and as its internationalisation process continues. the global call for improved regulation and increased oversight will thus intensify the efforts that have already been undertaken to strengthen the financial regulation for islamic finance. let me now focus my remarks on four major implications of the changing global financial regulatory landscape for islamic finance – first, particularly in financial systems in which islamic finance is being developed alongside the conventional financial sector in a dual system environment, ( which is the case for most ifsb member countries ), there will be a need to ensure that the reforms are undertaken in parallel. the concern is that there would be insufficient attention given for islamic finance and consequently, the tendency for broad - brush application of regulatory measures intended for conventional finance on islamic finance. in developing the appropriate regulatory framework for islamic finance, it is not uncommon to leverage on the established wisdoms of prudential regulation for conventional finance to achieve regulatory efficiency particularly in a dual system environment. whilst it may be envisaged that it is not necessary to reinvent the wheel, it should not override the importance of addressing the specificities of islamic finance where necessary. such a prudential regulatory design that takes into account the unique mix of risks associated with shariahcompliant instruments would enhance the effectiveness of the regulatory outcomes intended for islamic finance. although there