IFSB in High Spirits
Article Overview
The Islamic Financial Services Board (IFSB) is preparing for its annual summit in high spirits as Islamic finance continues to make inroads in non-Muslim majority countries.
Investor Demand
The IFSB highlighted continued sovereign sukuk issuances in the United Kingdom, Luxembourg and Hong Kong as a sign of investor demand to tap of deepening pools of Sharī`ah-compliant savings globally.
The Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the Islamic Development Bank (IDB) Group has won mandates from three countries, namely Jordan, Ivory Coast and Senegal, to assist them in issuing Sukūk. Dubai’s Noor Bank is the latest heavyweight entity to issue a debut $500 million Sukūk Wakālah. Kuveyt Turk Participation Bank issued its debut MYR300 million Sukūk Murābahah in the national Malaysian market. The syndicated Murābahah market continued to flourish alongside the proliferation of Sukūk with AlBaraka Turk Participation Bank raising $268 million from such a facility. The first Sharī`ah-compliant insurance product was launched through Lloyd’s of London by XL Group and Cobalt Underwriting, respectively. Malaysia’s i-VCAP launched its third ETF (Exchange Traded Fund). The Central Bank of Bahrain launched a new Wakālah liquidity management instrument.
Regulatory Push
At the same time, wide ranging reforms are underway in jurisdictions in both Asia and the Middle East to integrate Islamic finance into the full range of governmental expenditure plans for economic and social development.
International Institutions
Equally important, international institutions such as the International Monetary Fund and the World Bank are developing their capabilities to support the stability and resilience of Islamic finance, as well as to promote innovative approaches to funding investments in social and physical infrastructure through “Green” and “Social Sukūk”. On the regulatory side, the IFSB’s new standards are providing a common and consistent reference point for Islamic financial jurisdictions to strengthen the regulatory framework for stability, and to respond to the new Basel III capital and liquidity management frameworks. This can be seen, among others, through the issuance of a series of IFSB standards on stress testing, liquidity management, capital adequacy and an enhanced post-crisis supervisory review process.
Core Principles for Islamic Finance Regulation
The transformational impact of the Islamic finance industry can only be truly enhanced inter alia if the requisite prudential and supervisory infrastructure is in place. As such, issues relating to ‘Core Principles for Islamic Finance: Integrating with the Global Regulatory Framework,’ the Summit theme, is pertinent and follows the adoption last month by the IFSB of a new Standard on Core Principles for Islamic Finance Regulation (CPIFR)(Banking Segment) (IFSB-17). CPIFR was developed with the input from the IMF/World Bank, as well as other important partners of the IFSB, and comes under the World Bank’s Financial Sector Assessment Program (FSAP) – for the banking, insurance and capital markets sectors to assess the strength and effectiveness of regulation and supervision.
The main objective of the CPIFR is to provide a set of Core Principles – along with the associated assessment methodology – for the regulation and supervision of the Islamic financial services industry (IFSI), taking into consideration the specificities of the institutions offering Islamic financial services (IIFS) in the banking segment, the lessons learned from the financial crisis, and the objective of complementing the existing international standards, principally the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision.
The IFSB also envisages to prepare, in the coming years, Core Principles for the Islamic insurance (Takāful) and Islamic capital market sectors.
The 12th IFSB Annual Summit
The above developments will form the core of the discussions at the 12th IFSB Summit in Almaty with focus on the new regulatory developments, policy and market trends in the global Islamic financial services industry, concluding with a Panel Discussion on ‘The New Silk Road: The Importance of Regulatory Cooperation for Cross-Border Integration.’
Opening Keynote Addresses on 20 May 2015 will be delivered by the Right Honourable Karim Massimov, the Prime Minister of the Republic of Kazakhstan and The Honourable Akhmetzhan Yessimov, The Mayor of the Almaty City, Kazakhstan, while the Gala Dinner Keynote will be delivered by Dr. Hamed Hassan Merah, Secretary-General of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
The speakers include regulators from Jordan, Kazakhstan, Luxembourg, Malaysia, Pakistan, Qatar, Turkey and the UAE, and senior representatives from the Arab Monetary Fund, International Monetary Fund, the Islamic Cooperation for the Development of the Private Sector, the World Bank, and corporates and other entities involved in the global Islamic finance industry.
The Summit is also complemented by the traditional pre-Summit events, which will be held on 19 May 2015. They are:
- IFSB Meet the Members and Industry Engagement Session
- Industry Development Session by The World Bank
- INCEIF-MIFC Business Forum
- IFSB-IRTI Mid-Review of the “Islamic Financial Services Industry Development: 10-Year Framework and Strategies’
- Kazakhstan Country Showcase
The pre-Summit events are an important platform for IFSB members and non-members to articulate their Islamic finance initiatives, incentives and experiences in adopting and supporting the growth of a sound and stable Islamic financial services industry.
The 12th Annual IFSB Summit is specifically aimed at harnessing the latest developments and innovation in regulation, prudential standards, current market practices and future challenges to keep you informed about the global Islamic financial services market; to provide a platform for dialogue with your peers; and to give you a voice in contributing to the future direction of the industry.
