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CIBAFI submits feedback on liquidity rule to IFSB

MANAMA, January 15, 2015

The General Council for Islamic Banks and Financial Institutions (CIBAFI) has submitted feedback to the Islamic Financial Services Board (IFSB) on a new regulation for management of liquidity risk in Institutions.

The Exposure Draft of Guidance Note 6 on Quantitative Measures for Liquidity Risk Management in Institutions offering Islamic Financial Services (ED of GN-6), which was issued by the IFSB for public consultation, aims to complement global liquidity standards issued by the Basel Committee on Banking Supervision (BCBS) and other developments on liquidity risk management for the IFSI.

The standard also endeavours to support the regulatory and supervisory authorities to provide a level-playing field to the IFSI in the application of liquidity standards vis-a-vis their conventional counterparts.

CIBAFI secretary general Abdelilah Belatik said: “The comments submitted to the IFSB represent the views of CIBAFI Secretariat and the collective feedback received from our members. As the spokesman for the industry our perspective on the ED of GN-6 is that of practitioners who are required to implement standards and regulations while finding a balance between the requirements of regulators, the market, their shareholders, their customers, and other stakeholders.”

 The comments submitted to the IFSB by CIBAFI focused on three main areas. These included the need to clarify the regulatory treatment of various Shariah structures and the rationale for any differences, a suggestion to consider profit-sharing (such as Wakala-based) interbank flows as eligible inflows in the Liquidity Coverage Ratio (LCR) calculation, and a call to consider a review of the proposed implementation schedule of the draft in order to provide the IIFS with appropriate time to comply with the standard.

“As the voice of the industry, CIBAFI looks forward to future ongoing dialogue with the IFSB in order to facilitate the continued growth and development of the Islamic Financial Services Industry worldwide,” Belatik concluded. – TradeArabia News Service




Tags: Islamic Finance | IFSB | liquidity management | CIBAFI |

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