World Bank official hails Bahrain’s pioneering role

19 June 2007- Business Correspondent With projected size of new Islamic Sukuks to reach $30 billion, there are many challenges being faced by the Islamic finance industry including governance, regulations, standardisation and monetary policies. However, the conventional industry is realising the importance of Islamic finance, a senior official at the World Bank yesterday told the IIFM Conference.

Wafik Grais, senior advisor at the World Bank, said the transparency in marketing discipline contributes to financial resilience. “The Central Bank of Bahrain has played a pioneering role by supporting the Islamic finance industry from the regulatory and marketing perspectives. There is no progress without human endeavour and the results we have seen in terms of success of Islamic finance are very encouraging signs. Yet liquid finance markets in Islamic finance are in very early stage and need special attention and collective efforts to reach a point satisfaction.”

“Consideration should be given to international consensus for uniformity from the supervisory and regulatory point of view. The different regulatory regime is another big challenge for the Islamic finance industry to cope with. Diversity is associated with confusion in the Islamic finance industry in general terms as there are no rules to determine the risks. There is a need of standardisation of sovereign risks in the industry which will determine the relative cost of cross border investment and globalisation. There is also need to create a level playing field within the Islamic industry and Bahrain has really done well in this area. The issues like capital adequacy and deposit protection need to addressed properly. Ad hoc rules to run the Islamic industry will not help to reach the desired results with clear objectives.”

He added: “The development of financial markets will lead to a revolution of regulation. Bahrain can provide a technical assistance to the other countries.”

The conference consists of sessions on Islamic hedging, Islamic REITS , Islamic unit trust, Islamic liquidity management and the intra-bank market; Islamic primary- and secondary-market-issues development projects.

The opening ceremony was attended by over 300 industry experts representing a number of prominent international institutions. Support from international institutions and participation from around the world are a clear testimony of the relevance of the event and the interest of market practitioners in the sound development of Islamic capital and money markets.

Reference:: World Bank official hails Bahrain’s pioneering role

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