IFSB issued the exposure draft of Guidance Note-7 (ED GN-7) on Sharī`ah-compliant lender-of-last-resort (SLOLR) facilities. This exposure draft complements the existing IFSB guidance on SLOLR and offers 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 (IIFS) in their jurisdictions. Comments are requested by July 05, 2019.
ED GN-7 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. The exposure draft covers several essential features of an SLOLR arrangement, including the following:
- Preconditions for developing and implementing an SLOLR mechanism
- Eligibility criteria to access SLOLR
- Non-exhaustive selection of Sharī`ah-compliant structures and mechanisms that central banks could utilize for SLOLR purposes
- Applicability of penalty rates to these mechanisms
- Sharī`ah-compliant eligible collateral
- Relevant disclosures to be made by central banks to IIFS in their jurisdictions
Central banks are expected to start implementation of this guidance note from January 01, 2021, taking into account the time needed to prepare the necessary market infrastructure; to run appropriate assessments on eligible collateral, haircuts, and Sharī`ah-compliant structures; and to make the necessary disclosures to IIFS in their jurisdictions.
Comment Due Date: July 05, 2019
Effective Date: January 01, 2021
Keywords: International, Banking, SLOLR, IIFS, Guidance Note, Lender of Last Resort, Islamic Banking, IFSB
Previous ArticleFIN-FSA Decides Not to Impose CCyB Requirement on Banks
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
In a letter to the federally regulated financial institutions and pension plans, the Office of the Superintendent of Financial Institutions (OSFI) published a summary of the feedback received to the January 2021 discussion paper on ways to address climate risks.