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
CNB Assesses Financial Stability and Sets CCyB Rate at 2.5%Related Articles
EBA Launches Stress Tests for Banks, Issues Other Updates
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
