other, make it increasingly important for our country and its financial system to be equipped with the knowledge and the operational instruments needed to interact with financial systems complying with shari'ah principles. it is interesting to note that in the countries where arab revolts occurred and islamic - oriented political parties are now in charge of government, after the collapse of previous authoritarian regimes, the development of islamic finance is gaining momentum. very recently the egyptian legislative council has adopted a project to issue sukuk. even a cursory look at today ’ s program shows that islamic finance and its interactions with conventional financial practices are a source of numerous intriguing questions. i am therefore confident that the subject will stimulate the interest of participants, and most grateful to the speakers who have accepted to join the 4 panels. the overview of the industry, to which session 1 is devoted, will show that the growth of islamic finance in recent years is one aspect of the increased role being played in the global financial system by a number of emerging economies. this opens up new opportunities for channeling financial resources both to these countries and other markets but it also adds to the complexity of the system, calling for enhanced international cooperation by policymakers and regulators, lest the benefits of a financial system which is dynamic and prone to healthy innovation are jeopardized by instability. in the european context, some additional drivers can be identified : on the demand side, the growing resident muslim community potentially requesting more retail banking services, and on the supply side, an improved know - how on the part of european intermediaries, together with the already mentioned attractiveness of some financial markets for the investment of gulf countries ’ liquidity, and the potential use of islamic finance products to broaden funding sources to finance public debt. the question of public debt financing takes us to the subject of another session – session 3 – where the issuance of sukuk bonds, whose total outstanding volume reached $ 230 billions in 2012, will be discussed, together with their increased role in international capital markets. growing attention is devoted in europe to the possibility of issuing sovereign and corporate sukuk and we are pleased to have as chairperson of this session ms. maria cannata, director general of the public debt, department of the treasury of our ministry of economy and finance. coming to challenges and opportunities in the european framework, which will be discussed in sessions 2 and 4, let me conclude by only mentioning in passing some issues that may bis central bankers ’ speeches inhibit the development of

the issue of financial market regulation a priority. in cooperation with the financial stability board and the basel committee on banking supervision, they are working to develop a coherent regulatory framework at the global level. even so, i ’ m concerned to see that some countries outside europe are adopting their own regulatory bis central bankers ’ speeches initiatives which breach the principle of cross - border coherence. i believe that the danger of banking regulation one day returning to the principle of “ every man for himself ” needs to be taken seriously. yet regulation not only needs to be coherent across borders and regions but also across different sectors. here, too, the central issue is the danger of regulatory arbitrage. one current example is the growth of the shadow banking industry, where financial enterprises conduct business which creates bank - like risks but is either regulated insufficiently or not at all. in many cases, these risks are not even recorded. yet the shadow banking industry may become a source of systemic risk. we therefore need to expand the regulatory framework in this area to ensure that it is coherent. third, it goes without saying that the content of regulation also needs to be coherent. the capital rules are a case in point. unlike for all other forms of credit, banks do not have to hold capital against government bonds in line with the risks that they carry, and this inconsistency has dangerous side - effects. since the euro - area sovereign debt crisis – if not before – it has become clear that government bonds are anything but risk - free. in this area too, we should work to restore the coherence of regulation in the medium term. as crucial as coherence is, however, regulation also has to be guided by the principle of proportionality. it is appropriate to apply strict regulation to large institutions which are closely interconnected within the financial system : the entities we call “ systemically important institutions ”. equally, however, we must take care not to overburden small and medium - sized institutions ; they should be governed by simpler regulation. the standardised approaches applied in supervision and de minimis thresholds such as those used in reporting can help us to achieve this proportionality. ladies and gentlemen, i ’ ve outlined four different principles for ensuring good regulation. first, regulation has to be flexible and able to keep pace with developments in the financial system. second, regulation must be as simple as possible and as complex as necessary. third, regulation has to be coherent in terms of its content, as well