The Islamic Financial Services Board (IFSB) and the International Association of Deposit Insurers (IADI) issued core principles for the development and implementation of effective Islamic deposit insurance systems. These principles take into consideration the characteristics of Shari’ah compliant contracts and specificities of Islamic banks, while complementing the existing international standards.
The objectives of the core principles are to:
- Serve as a benchmark international framework to facilitate the development and implementation of an effective Islamic deposit insurance system
- Enable the existing Islamic deposit insurance system to identify best-practice gaps in their current modalities
- Facilitate an independent, third-party or self-assessment of the compliance of an Islamic deposit insurance system with core principles
By building on their joint efforts, IADI and IFSB are envisaging that jurisdictions will use these core principles and their compliance assessment methodology as a benchmark for assessing the quality of their Islamic deposit insurance system and for identifying gaps in their Islamic deposit insurance practices, including measures to address them. This work will continue with a series of pilot tests for the core principles, which will be used to help develop a joint IADI-IFSB Handbook for the Assessment of Compliance with the core principles to further develop and support this guidance standard going forward. Overall, the core principles will promote further integration of Islamic deposit insurance into the international architecture for financial stability
Keywords: International, Banking, Islamic Banking, Deposit Insurance, Shariah, Core Principles, IADI, IFSB
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