IFSB Guidance on Lender of Last Resort Facilities for Islamic Banks
The IFSB Council resolved to approve the adoption of a guidance note on Sharī`ah-compliant lender-of-last-resort facilities (GN-7) and a technical note on financial inclusion and Islamic finance (TN-3). The guidance note on lender-of-last-resort facilities complements the existing IFSB guidance on Sharī`ah-compliant lender of last resort (SLOLR). It aims to offer international benchmark guidelines to regulatory and supervisory authorities for developing and offering SLOLR facilities as part of the financial safety net arrangement for institutions offering Islamic financial services in their jurisdictions.
The guidance note is primarily intended to serve as a benchmark for central banks in establishing and operationalizing an SLOLR framework that applies to full-fledged Islamic commercial banks and Islamic commercial banks that are subsidiaries of conventional banks. Specifically, the guidance note covers the following:
- Preconditions for developing and implementing an SLOLR mechanism, including considerations of moral hazard and achieving a level playing field between the conventional and Islamic systems
- Sharī`ah perspectives on instruments and operating modalities for developing SLOLR facilities for institutions offering Islamic financial services
- Supervisory and operational considerations for SLOLR
- Broader integration of SLOLR within the macro-prudential framework and its implications from a monetary policy perspective
The technical note on financial inclusion provides guidance on good practices in regulating the financial sector to enhance financial inclusion through Islamic finance, while identifying the main challenges and emerging issues, as experienced by the market players and regulators, in microfinance and financial inclusion related to Islamic financial services. The note also aims to provide international benchmark guidelines on regulatory and supervisory policies to support financial inclusion initiatives in the Islamic financial services industry and on the application of the proportionality principle. The scope of the technical note includes the banking sector, the non-bank financial institutions, and the Islamic capital market with role in promoting financial inclusion, where needed.
Related Links
Keywords: International, Banking, Lender of Last Resort, Sharī`ah, Fintech, SLOLR, Islamic Banking, Guidance, IFSB
Previous Article
ECB Publishes Results of Financial Stability Review in November 2019Related Articles
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
PBC Issues List of Systemic Banks, Adds 2 Foreign Banks to CERB List
The China Banking and Insurance Regulatory Commission (CBIRC) published the administrative measures for internal control of wealth management companies, which come into force on the day of promulgation.
PRA Publishes Discussion Paper on Its Future Approach to Policy
The Prudential Regulation Authority (PRA) proposed its approach to policy-making as it takes on wider rulemaking responsibilities under the Financial Services and Markets Bill.
ECB Publishes Opinion on Proposed Regulation on Data Act
The European Central Bank (ECB) published its opinion on the proposal for a regulation on harmonized rules on fair access to and use of data (Data Act).
