its infancy. the very fact that islamic banking differs from conventional banking in important ways poses regulatory and supervisory problems. the risks taken by islamic financial institutions are not directly comparable to those of conventional financial institutions. in most of the countries where conventional banks operate alongside islamic banks, the same regulatory and supervisory standard is being applied to the extent possible. so far the tendency has been to apply the standard set by the basel committee on banking supervision. it is however recognized that the same standard as is applicable to conventional banking cannot be made rigorously applicable to an islamic banking framework. designing a comprehensive set of standard regulatory prescriptions and supervisory norms for an islamic banking framework that are valid for all countries is a task yet to be accomplished. a prominent obstacle in the accomplishment of this task is the lack of uniformity in specific forms of islamic principles in muslim countries. certain islamic banking procedures and financial instruments that are accepted in one muslim country may be rejected in another 5 muslim country. the variants of islamic banking practices make generalisation difficult as to what constitute standard and universally acceptable islamic banking principles. it is deemed imperative to reach a paradigm version of islamic banking that could be used as a benchmark for the crafting of an effective regulatory system and supervisory norms. in short, the regulatory challenges raised by islamic financial institutions are yet to be resolved in a comprehensive manner. some regulatory authorities have already started looking into the appropriate regulatory framework. however, there is still quite a distance to travel before regulatory authorities could come up with a standard and comprehensive set of regulatory prescriptions and supervisory norms for islamic banking. recognising these facts, the imf supported and facilitated the establishment of the islamic financial services board ( ifsb ) in 2002 with a view to promoting, disseminating and harmonizing best practices in the regulation and supervision of the islamic banking industry. the ifsb also aims at promoting good practices in islamic financial institutions in risk management through research, training and technical assistance. it recently released exposure drafts on risk management standards for islamic financial institutions. the work of the accounting and auditing organisation for islamic financial institutions is also of crucial importance. in the same vein, the work carried out by shariah supervisory boards for islamic financial institutions is of commendable importance for regulatory authorities. in conclusion, let me reiterate that banking is a universal concept that knows no boundaries – be they geographical, ethnic or religious. any form of banking, so long as it is conducted within the parameters of the laws and regulations to provide services

= en & hash = 15d94bd65c2efa6962989d10e21543b7b7013c1c. https : / / www. ifsb. org / download. php? id = 5724 & lang = english & pg = / index. php. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice systemic role in thirteen countries. 3 there ’ s also a nascent islamic insurance industry ( takaful ) – and a much larger capital market, anchored around the growing stock of sukuk4 issued by companies and governments ( chart 1 ), and over 1, 500 shari ’ ah compliant investment funds. chart 1 : global sukuk issuance and stock outstanding source : islamic financial services industry stability report 20202 the role of the uk and the bank of england in supporting islamic finance so far, so impressive. but what, you might ask, does all this have to do with the uk or the bank of england, when the centre of gravity for islamic finance lies in the middle east, north africa, south and south east asia? well, the fact is that, outside those regions, the uk is the pre - eminent centre for islamic finance. and that reflects its significant, well - established domestic muslim population ; its strong relationships with the wider muslim world ; and its deep expertise in financial market origination and distribution, embedded in a mature legal and regulatory framework. 5 indeed, islamic finance in the uk goes back many decades ( table 2 ) : from commodity - based short term liquidity management and trade finance in the 1970s, to the first uk islamic bank, investment funds and takaful in the early 1980s. 6 defined by the islamic financial services board as countries where at least 15 % of banking assets are ( self - declared as ) shari ’ ah compliant. islamic financial instruments conferring direct partial ownership of underlying assets. see for instance ‘ challenges and opportunities for islamic banking and finance in the west : the united kingdom experience ’ by rodney wilson [ 1999, 2000 ] 7 ( 1 & 2 ) islamic economic studies 35 - 59 ; or ‘ islamic finance in the united kingdom : factors behind its development and growth ’ by ahmed belouafi and abdelkader chachi [ 2014 ] 22 ( 1 ) 37 - 78. al barakah international bank, dar al mal al islam