IFSB Consults on Sharī`ah Compliant Liquidity Risk Management Tools
The Islamic Financial Services Board (IFSB) is seeking comments, until December 09, 2022, on an exposure draft of the technical note on Sharī`ah compliant liquidity risk management tools. Additionally, IFSB announced the dissemination of country-level prudential and structural Islamic financial indicators data and published new set of frequently asked questions (FAQs) on four IFSB standards.
Below are the key highlights of the recent updates:
- The exposure draft of the technical note aims to enumerate liquidity risk management tools and examine their Sharī`ah compliance and assess their regulatory and supervisory implications. The draft technical note assesses the needs of the institutions offering Islamic financial services, provides recommendations in dealing with liquidity risk management issues, proposes illustrative versions of Sharī`ah-compliant tools for liquidity risk management, and provides technical guidance on the modus operandi of the Sharī`ah-compliant liquidity risk management tools. Sharī`ah-compliant liquidity risk management tools may be used to manage liquidity risk on either side of the balance sheet.
- IFSB announced the dissemination of country-level prudential and structural Islamic financial indicators data for the second quarter of 2022 on the Islamic banking sector in IFSB member jurisdictions. The prudential and structural Islamic financial indicators data on the Islamic banking sector provides sectoral country-level data covering full-fledged Islamic banks and Islamic windows of conventional banks in the respective jurisdictions. The database contains a number of prudential and soundness indicators, including but not limited to capital adequacy, asset quality, earnings, leverage, liquidity, and sensitivity to risks. It also provides additional prudential indicators that facilitate analysis of the concentration of exposures of banks, as well as a set of structural indicators that captures the overall size and structure of the Islamic banking sector.
- Additional publication set out a new set of frequently asked questions (FAQs) on four IFSB standards: guidance note on the practice of smoothing the profits payout to investment account holders (GN-3), IFSB-17 on core principles for Islamic finance regulation (banking segment), IFSB-26 on core principles for Islamic finance regulation (financial market infrastructure), and IFSB-8 on guiding principles on governance for takaful (Islamic insurance) undertaking. The two sets of FAQs for IFSB-17 provide clarifications with respect to the implementation of the core principles for regulating the Islamic banking segment.
Related Links
- Press Release on Liquidity Risk Management Tools
- Draft Note on Liquidity Risk Management Tools
- Press Release on Islamic Banking Indicators
- Press Release on FAQs on IFSB Standards
- FAQs on IFSB-17
Keywords: International, Banking, Islamic Banking, Technical Note, Liquidity Risk, Capital Adequacy, FAQs, Basel, IFSB
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