another major area witnessing far - reaching reforms. driven by the experience of global financial crisis, banking regulation, under the able leadership of the basel committee, has witnessed a major overhaul. strenuous efforts have been made to improve resilience of banking systems across the globe. these measures are vitally important, given the increasing uncertainty of when or where the next shock would emanate from. consider the stress that financial markets had to face in recent years. in 2013, it was the us taper tantrum, in 2014 it was the collapse in oil prices, in 2015 it was rebalancing in china, and this year it was brexit, just to quote a few examples. these events were markedly different in geographical origin and root causes but were common in rattling the global markets. against this backdrop, ensuring a resilient banking system capable of withstanding a variety of shocks is no easy task. and these shocks are not only exogenous ; the banking system itself is in a state of flux amid evolving risks, in part due to the very financial innovations i just talked about. this calls for continuously upgrading our regulatory regime. accordingly, we in kuwait, like our colleagues in the region, have not only refined our existing regulations to reflect the best global practices, but have also introduced a host of new measures. this journey brought its own set of challenges, and i would like to point out one in particular, to benefit from the presence of our esteemed colleagues from the bis. similar to other jurisdictions with dual banking system, we have a sizeable presence of islamic banks in kuwait. yet we found limited relevant guidance for the application of basel iii on islamic financial institutions, if at all. for the most challenging aspects of basel iii reforms, it has been left to the discretion of individual regulators to figure out how best to apply the proposed rules to islamic banks. however, the use of discretion, though well intended, is bound to create differences across countries, and more so in the case of islamic finance where the lack of consistency in shari ` ah interpretations makes the task even harder. consequently, we may witness diverging approaches to regulation of islamic banks across jurisdictions, with the risk of regulatory arbitrage. going forward, we also need to recognize that ensuring stability, of a constantly adapting banking system, cannot be left to regulation alone. therefore, we need to strengthen our supervisory capacity, to suitably complement our revamped regulatory regimes. only through effective supervision can

governor of the central bank of kuwait, basel a. al - haroon, in the 46th ordinary session of the council of the governors of the arab central banks and monetary authorities, held in jeddah, kingdom of saudi arabia on september 18, 2022. page 1 of 4 in line with its proactive approach adopted since march 2020, the central bank of kuwait has taken several measures and actions through its various monetary, supervisory and hedging instruments. at the level of monetary measures, the central bank of kuwait cut the interest rate several times in march 2020 down to all - time low 1. 5 % to reduce the borrowing cost and ensure that the temporary liquidity issues at the cbk - regulated units would not turn to permanent issues to their solvency. this step was followed by a series of measures related to financial stability including activation of its emergency plans and those of the banking sector to address the requirements of the pandemic, as well as taking a package of measures within the macroprudential policy to ease the regulatory requirements upon the outbreak of the crisis, the most important of which was releasing the prudential capital buffers of 2. 5 %, facilitating liquidity requirements to provide a wider lending space for banks, and reducing the risk weights related to exposures to small and medium enterprises, thus supporting the vulnerable sectors. as regards, the financial stability, the measures included payment moratoriums for the affected customers, obligating banks not sell or seize the collateral, and instructing banking sector units to conduct a comprehensive review of their credit and investment portfolios. to mitigate the economic and financial damages, and maximize the benefits from the aforementioned monetary and financial measures, the central bank developed and implemented a clear plan to follow up on the situations during the pandemic, in light of the data on the conditions and spreading infection. the central bank of kuwait formulated a set of goals to curb the crisis repercussions and ensure business continuity, support the crucial sectors, and prevent the short - term liquidity crisis from turning into a solvency crisis. having launched a package of anti - crisis measures, the central bank of kuwait maintained its vigilant monitoring of the local and global economic developments, oversight over the banking sector and monitoring its financial soundness indicators. the sector's results revealed that some banks took advantage of the mitigants to practice their business comfortably without any pressures as a result of the crisis. development of a plan to exit the stimulus environment