News Brief No. 02/41

News Brief: IMF Facilitates Establishment Of Islamic Financial Services Board

May 1, 2002

In response to the growing significance of the Islamic financial services industry in many countries, and with the purpose of promoting, disseminating, and harmonizing best practices in the regulation and supervision of this industry, a group of governors and senior officials of central banks, the Islamic Development Bank (IDB), and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) met in Washington, D.C., at the International Monetary Fund on April 21, 2002, and agreed to establish the Islamic Financial Services Board (IFSB).

The IFSB will serve as an association of institutions that have responsibility for the regulation and supervision of the Islamic financial services industry and will: (1) set and disseminate standards and core principles-as well as adapt existing international standards-for supervision and regulation, consistent with the Sharia'a principles governing the industry, and for voluntary adoption by member countries; (2) liaise and cooperate with other standard-setters in the areas of monetary and financial stability; and (3) promote good practices in risk management in the industry through research, training, and technical assistance.

The IFSB will be headquartered in Kuala Lumpur, Malaysia. At the April 21 meeting, the participating governors and senior officials agreed to establish a Steering Committee headed by H.E. Dr. Zeti Akhtar Aziz, Governor, Bank Negara Malaysia, to undertake the necessary steps for the establishment and inauguration of the IFSB in Kuala Lumpur.

The decision to establish the IFSB is the culmination of an extensive two-year consultative process initiated by governors and coordinated by the IMF, in collaboration with the Islamic Development Bank and AAOIFI. The IMF has convened several consultative meetings to facilitate the exchange of views among governors on the objectives and structure of the IFSB.

Governors and senior officials attending the April 21 meeting were:

1. H.E. Shaikh Ahmed bin Mohammed Al Khalifa, Governor, Bahrain Monetary Agency;

2. Dr. Achjar Iljas, Deputy Governor, Bank of Indonesia;

3. H.E. Dr. Mohsen Noorbakhsh, Governor, The Central Bank of the Islamic Republic of Iran;

4. H.E. Sheikh Salem Abdul Aziz Al-Sabah; Governor, Central Bank of Kuwait;

5. Dr. Nasser Saidi, Vice Governor, Bank of Lebanon;

6. H.E. Dr. Zeti Akhtar Aziz, Governor, Bank Negara Malaysia;

7. H.E. Dr. Ishrat Husain, Governor, State Bank of Pakistan;

8. H.E. Hamad Al-Sayari, Governor, Saudi Arabian Monetary Agency;

9. The Hon. Dr. Sabir Mohamed Hassan, Governor and Chairman of the Board, Bank of Sudan;

10. H.E. Sultan Bin Nasser Al Suwaidi, Governor, Central Bank of the United Arab Emirates;

11. Dr. Ahmed Abisourour Acting Director, Islamic Banks' Office (IBO), IDB; and

12. Prof. Rifaat Ahmed Abdel Karim, Secretary-General, AAOIFI.

The meeting was also attended by several observers and facilitators from the IMF and central banks.