IFSB to celebrate 10th anniversary in 2013

London – The Islamic Financial Services Board (IFSB), the prudential and supervisory standard setting body for the global Islamic financial services industry, celebrates its 10th anniversary in 2013, according to a press report.

Today, the IFSB is a far cry from those early days in March 2003 when it started operations at its headquarters in Kuala Lumpur with Prof. Rifaat Abdel Karim at its helm as its inaugural secretary-general. While his successor, Jaseem Ahmed, a former senior executive at the Asian Development Bank, who took over in April 2011, is trying to stamp his own style and vision on the multilateral organization building on the achievements of the past decade, it is clear that the latter still has several major challenges ahead to help facilitate an orderly and holistic development and integration of the global Islamic financial services industry.

It remains a moot point whether the IFSB is perceived to be constrained by its mandate, which is to introduce prudential and supervisory standards, guidelines and practice notes for the global Islamic finance industry in consultation with various stakeholders to promote its orderly and sound development and thereby contributing to financial stability and economic growth. But to pursue an agenda relating to prudential and supervisory standards seemingly detached from the regulation, authorization, monitoring and enforcement of Islamic financial institutions (IFIs) in member jurisdictions per se is inexplicable because in today’s globalized world they are inextricably linked to each other.

What the IFSB must not do is to behave as if it is a mere multilateral political organization dabbling in passing with financial sector prudential standard setting matters. Financial sector prudential and supervisory standard setting, as other functions relating to the sector, has to be seen to be above politics, national interest and petty nationalisms. Otherwise the exercise becomes compromised at the onset and the achievements and progress similarly stunted.

This is where character, political will and a thought provoking focused plan of action come into play. The onus is not only on the senior management but perhaps more importantly also on the Governing Council of the IFSB, which met in Jeddah recently and appointed Abdullah Saoud Al-Thani, Governor of Qatar Central Bank (QCB), and Mohammed Rosli Sabtu, Managing Director of Autoriti Monetari Brunei Darussalam (AMBD), as Chairman and Vice-Chairman of the Council for 2013 respectively. The IFSB has accomplished a lot, but it needs to use these achievements to consolidate its future strategy with a much more urgent and bolder approach, even at the risk of upsetting some of its members.

Its achievements are in some respects understated because they do not necessarily translate into instant headline grabbing or immediate impact initiatives given the nature of standard setting. In December, for instance, the Council of the IFSB at its meeting in Jeddah hosted by the Islamic Development Bank (IDB) admitted eight new members into the organization.

This, according to the IFSB, brings the total membership of the Board to 184 members comprising 55 supervisory and regulatory authorities from the banking, capital markets and Islamic insurance (takaful) sectors in 41 jurisdictions, as well as eight international inter-governmental organizations, and 121 market players (financial institutions, professional firms and self-regulatory organizations). The newly admitted members include the Capital Markets Authority, Kuwait and the National Insurance Commission, Nigeria as Full members; and the Financial Reporting Foundation, Malaysia, Prudential BSN Takaful Berhad, Malaysia, Safran Stratejik Yonetim ve Teknolojik Danismanlik Hizmetleri Ltd. Sti., Turkey, the Central Bank of the Turkish Republic of Northern Cyprus, Standard & Poor’s, Singapore, and the Gulf Bond and Sukuk Association, United Arab Emirates as Observer members.