IFSB Publishes FAQs on Islamic Finance Standards
The Islamic Financial Services Board (IFSB) published a set of frequently asked questions (FAQs) that provide additional guidance on four IFSB standards. These standards are IFSB-12 on guiding principles on liquidity risk management for institutions offering Islamic financial services, IFSB-13 on guiding principles on stress testing for institutions offering Islamic financial services, IFSB-24 on guiding principles for investor protection in Islamic capital markets, and IFSB-25 on disclosures to promote transparency and market discipline for takāful/retakāful undertakings. The new set of FAQs offers clarifications and explanative directions on the issued standards.
The FAQs for IFSB-12 give explanation and guide about the main principles in the effective management of liquidity risk in institutions offering Islamic financial services. These include identification and measuring liquidity risk and the role of the top management and supervisors of an institution. The questions also address the key factors in controlling and mitigating liquidity risk and how to report and disclose this risk. In addition, the FAQs provide clarifications related to liquidity risk management at the consolidated level, along with the home-host and cross-sector supervision for liquidity risk. The FAQs for IFSB-13 include responses to questions raised about IFSB-13, including questions regarding the differences between scenario analysis and sensitivity tests, the role of Supervisory Sharīʻah Board in stress testing framework, stress testing related to capital planning, and model and parameter risks posed by using models for stress testing.
Related Links
Keywords: International, Banking, Insurance, Securities, FAQ, Islamic Finance, Liquidity Risk, Stress Testing, Regulatory Capital, IFSB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
Previous Article
CPMI and IOSCO Consult on Guidance on Stablecoin ArrangementsNext Article
EBA and EIOPA Set Out Work Priorities for 2022Related Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.