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Islamic finance — focus on capital market development

The Islamic finance sector is a subset of the overall domestic financial sector. Governments face pretty much the same contingent liabilities with Islamic banks as they do with conventional ones. Some 73% of total Islamic finance assets are within Islamic banks. Takaful accounts for a mere 2%, while the remainder 25% constitute assets within capital market instruments such as sukuk, mutual funds and others. Thus, within the Islamic finance space, banking is at least three times the size of capital markets. Policymakers would be well advised to seek not just to grow Islamic finance, but focus on the capital markets component. This is not just good from a macroeconomic vulnerability viewpoint, but is also more in keeping with the Shariah philosophy of risk sharing.

Islamic Scholars Debate Validity of #Cryptocurrencies

The world's top Islamic finance scholars are scrutinizing the validity of cryptocurrencies. The discussions are part of the annual sharia conference of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) being held in Bahrain this week. The key question for scholars is whether cryptocurrencies fall under the so-called "ribawi" category, which includes commodities like gold and silver. AAOIFI primarily issues accounting and sharia standards for Islamic finance institutions, but there is no current indication on cryptocurrencies. Scholar deliberations, however, could clarify what types of cryptocurrencies are religiously acceptable and influence future product development.

Maybank Islamic to grow trade financing biz

Malaysian Islamic banks are boosting their trade financing market share with various measures. Maybank Islamic CEO Mohamed Rafique Merican said the bank intended to grow its trade facilities in line with growing demand for Islamic finance in Malaysia. Mohamed Rafique was speaking to reporters after a forum on "Islamic Trade Finance: Revitalising Trade and Unlocking New Potential". He said a lot more could be done to boost Islamic trade facilities, which stood at 1.5% out of US$50 billion. RHB Islamic Bank CEO Datuk Adissadikin Ali said Islamic banks would need to collaborate with the financial technology players to provide e-commerce trade financing. He added that RHB Islamic Bank was developing an e-commerce trade financing platform to enable companies to boost their working capital and the platform was likely to be implemented next year.

A 200-year-old idea offers a new way to trace stolen bitcoins

Bitcoin's blockchain provides evidence of every Bitcoin transaction that's ever taken place. Many of the transactions recorded on that distributed ledger are crimes. But a group of Cambridge cybersecurity researchers argues that one can still distinguish the contraband coins from the legitimate ones. Based on a legal precedent from an 1816 British court decision, they say that the first coin that leaves a Bitcoin address should be considered the same coin as the first one that went into it, carrying with it all of that coin's criminal history. The Cambridge researchers have gone so far as to code a proof-of-concept software tool, which they plan to release later this year.

#Malaysia can be Islamic #fintech leader, says Fitch Group unit

According to research agency BMI, Malaysia has the potential to be a world leader in Islamic financial technology (fintech). The research firm said Malaysia’s Islamic banking sector was worth US$202 billion last year, while its Islamic loans also more than doubled to 30.2% the same year, compared to just 7.8% a decade ago. BMI noted Malaysia has a developed infrastructure, an increasingly affluent and tech-savvy population, and high mobile and broadband penetration rates coupled with fast internet speeds. The Memorandum of Understanding between MIMOS and the International Center for Education In Islamic Finance (INCEIF) has laid down the foundation for the development of Islamic fintech in Malaysia.

World Bank, IDB urge Islamic finance to play the long game

The World Bank and the Islamic Development Bank want to increase the use of long-term investments in Islamic finance. The two multilateral bodies set out a series of policy recommendations in a joint report, aiming to capitalize on the risk-sharing and asset-backed features of Islamic finance. Islamic banking products have often been developed under the same regulatory regime as conventional lenders, so instruments are sharia-compliant but economically similar to their interest-based counterparts. This contributes to an over-allocation of savings to short and medium-term financial instruments, with a reliance on risk-transfer rather than risk-sharing. To counter this, policymakers could help develop sector-specific investment banks as well as non-bank Islamic firms such as leasing companies, venture capital firms and crowdfunding platforms. The report also raised the need for tax incentives and Islamic insurance schemes to help extend maturities.

Coincidental documents reveal Iranian Guard smuggled billions via Bahraini bank

Iranian owners of a Bahraini bank complained about Bahrain to an international arbitration court in the Netherlands. Bahrain responded with documents proving that $7 billion was smuggled through suspicious accounts with the consent and knowledge of the bank’s management. Future Bank was closed in 2015, but documents prove Iran’s secret assistance in evading international sanctions and smuggling billions of dollars over more than a decade. Bahraini officials criticized Future Bank for allowing the cleric Isa Qassim to make cash deposits totaling millions of dollars over several years, and directing some of the money to a charity linked to terrorism. Audits revealed then that in hundreds of cases, bank transfers were accompanied by specific instructions to avoid references to Iran or Iranian banking codes.

Jaiz Bank, IDB Sign $20m SMEs Financing Deal

Jaiz Bank and Islamic Corporation for the Development of Private Sector (ICD) have signed a $20 million line of agreement to finance the Small and Medium Sized Enterprises (SMEs) of Nigeria. The financing deal covers sectors such as industry, communications, technology, health, manufacturing and agriculture. Hassan Usman, Managing Director of Jaiz Bank, signed on behalf of the bank while Okan Altasil, the Regional Office Director of ICD, signed for the corporation. The ICD management said the reason for extending such financing to some Nigerian banks was because SMEs have crucial role to play in a country’s growth and development. The ICD had previously extended a total of $120 million line of financing facility for the development of SMEs in Nigeria.

Islamic bank to meet business world in Izmir this month

Turkey's Aegean province of Izmir will host an Islamic Development Bank Group (IDB) event between 26-27 April. The announcement was made by Turk Eximbank CEO Adnan Yildirim, who said that Turkey aims to boost trade relations with the IDB's 57 member countries. He added that Turk Eximbank wants to raise Islamic countries' 10% share of world trade to 20%. Turkey's current trade with IDB member countries is around $45 billion and the bank hopes to raise it to $100 billion within 10 years. Turk Eximbank aims to double its support to companies in IDB member countries. The lender ranks second globally after South Korea's Eximbank in terms of financing exports.

#Malaysia remains lead in Islamic finance

Malaysia has great potential to broaden its market share and strengthen its leadership in Islamic finance. According to the latest report by the Malaysia International Islamic Financial Centre, Asia’s Islamic financial assets amounted to US$528.7 billion (RM2.05 trillion), or 26% of the world’s Shariah-compliant financial assets as at end-2017. Malaysia continued to be the main driver for both sukuk outstanding and issuance for the year, with a market share of 51% and 36.2% respectively as at end-2017. The country also led in the Islamic wealth management industry with US$28.3 billion (36.5% global share). It also ranked first in terms of number of funds with a total of 394 funds and 27.9% global share, followed by Pakistan with 147 funds and Indonesia with 143. In the banking sector, Malaysia ranked third globally after Iran and Saudi Arabia with a total Islamic banking assets of US$204.4 billion as at end-2017.

#Saudi- Finance Minister heads the Kingdom's delegation to the 43rd Islamic Development Bank board of governors Annual Meeting in Tunis

Saudi Finance Minister Mohammed Al-Jadaan will head the Kingdom's delegation to the 43rd Annual Meeting of the Board of Governors of the Islamic Development Bank between April 4-5 in Tunis. The Saudi delegation will include Dr. Ahmad Al-Khulaifi, Governor of the Saudi Arabian Monetary Agency (SAMA), Dr. Hamad Al-Bazie, Vice Minister of Finance, Eng. Yousef Al-Bassam, Vice President and Managing Director of the Saudi Fund for Development (SFD). The IDB annual meeting's agenda will comprise of discussion sessions about the 2017 IDB activities report, IDB's institutions annual report and the establishment of the Islamic Solidarity Fund for Development (ISFD). The ISFD aims to alleviate poverty, develop capacity, and eradicate illiteracy, diseases and epidemics in member countries via funding various productive, social and service projects and programs.

The rise of Muslim #Millennials and what it means for Islamic finance

Millennials are the generational demographic bracket following Generation X, which was a more consumerist, independent-minded age cohort. In the Muslim world, the Arab Spring, the Global Recession and other developments like dropping oil prices had major impact on this generation. A study by credit card firm Visa showed that Millennials make up the fastest-growing consumer segment in the GCC region. Visa estimates that Millennials in the UAE will receive an average income of $40,000 annually by 2019 which naturally makes them an important customer segment for banks. Millennials are generally savvy with digital technologies and the sharing economy. They have a more liberal approach to economics, which means that they are generally not brand-loyal but rather look for the best deal. Muslim Millennials are truly asserting their needs in Islamic finance, as they do in halal travel, food, media and fashion. For Islamic banks, this means that laggards will lose out on this very important customer segment, if they do not invest in their digital banking solutions.

And The Country With The 'Most Expensive' Plate Of Food Is...

A report from the World Food Programme (WFP) analyzed the glaring gap in food costs around the world. The report points out that people living in poor countries have to spend the bulk of their wages on basic nourishment. The research measured the proportion of daily income that people spent on ingredients for a basic bean stew in different countries last year before retro-projecting the ratio on to a resident of New York State. An average person living in New York State would spend about 0.6% of his or her daily income on ingredients for a bean stew, approximately $1.20. Someone living in South Sudan would have to work for a day and a half to afford a basic meal with the cost of the ingredients 155% of daily income. The real price of a plate of bean stew in South Sudan would be $321.70, so many of the country's inhabitants are struggling to feed themselves.

Syed Alwi is Agrobank’s new CEO

Agrobank has appointed Syed Alwi Mohamed Sultan as its new president and CEO. The appointment has received approval from Bank Negara Malaysia and the Ministry of Finance. Previously, he had held several senior management positions with various banks such as Bank Muamalat Malaysia, BNP Paribas, Standard Chartered Saadiq, The Islamic Bank of Asia and HL Bank Singapore. Syed Alwi has a bachelor’s degree in Accounting and a first-class master of business administration in Islamic finance from the International Islamic University of Malaysia. Agrobank became a full-fledged Islamic bank in 2015. It provides Shariah-compliant banking products and funding to cater for the halal food industry and agriculture-related activities.

#Qatar central bank backs three-way Islamic bank #merger

Qatar’s central bank hopes the planned merger between three local Islamic banks can proceed this year. Masraf Al Rayan, Barwa Bank and International Bank of Qatar have been discussing a merger, though they missed the target date to complete the proposed deal. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Qatar last June. Qatar accused them of trying to sabotage its financial markets and manipulate its currency. Sheikh Abdullah said that since the embargo started, the central bank had been meeting regularly with executives of banks to ensure daily control of liquidity levels and financial transfers. He added that Qatar plans to issue roughly the same amount of riyal debt in 2018 as it did in 2017, when it issued 47.5 billion riyals ($12.3 billion). That included 18.5 billion riyals of bonds and 15.4 billion riyals of sukuk.

Islamic bank IDB officially launches $500M science #fund

The Islamic Development Bank (IDB) launched a $500 million fund to strengthen science, technology and innovation in the Muslim World. The launch of the fund was made at the IDB's 43rd Annual Meeting in Tunis. The fund had been announced for the first time in Kazakhstan in September 2017, by the IDB President, Dr. Bandar Hajjar. He said 57 IDB member countries face challenges in development and many of them could not solve their problems on their own. He added that the IDB wants to be a catalyst so that people can lead the process of development. Dr. Hayat Sindi, chief scientific adviser to the IDB president, said the bank would like to give every scientist an opportunity to provide solutions to development challenges. She said the aim of the fund was to give a boost to creative minds.

DFSA hosts accounting standard-setters for Islamic finance

The Dubai Financial Services Authority (DFSA) recently hosted the International Accounting Standards Board (IASB) as part of a consultancy meeting. The Authority's involvement reflects its commitment to developing an effective and supportive regulatory framework for Islamic finance. The DFSA is a member of the Islamic Finance Consultative Group (IFCG), which focuses on challenges that may arise in the application of International Financial Reporting Standards (IFRS). The meeting was attended by IFCG members from Bahrain, Indonesia, Malaysia, Pakistan, Saudi Arabia, the UAE and the United Kingdom.

IDB Group and World Bank launch second edition of Global #Report on Islamic Finance

The Islamic Development Bank (IDB) Group and the World Bank Group launched the second edition of the Global Report on Islamic Finance. The report is entitled "The Role of Islamic Finance in Financing Long-Term Investments". It presents a global perspective on the need for long-term investments in the Sustainable Development Goals (SDGs) and proposes the use of Islamic finance. Despite the huge potential in Islamic finance, the report notes that the Islamic financial sector is a small player in the global financial markets and requires a concerted push for the regulatory and legal changes to take root. It therefore recommends strengthening the Islamic financial system by developing a supportive legal, administrative, and regulatory environment. The biennial Global Report on Islamic Finance is a joint initiative of the Islamic Research and Training Institute (IRTI) of the IDB Group and the World Bank.

Islamic Development Bank aims to empower women

The Islamic Development Bank (IDB) aims to improve women’s access to infrastructure that will offer economic opportunities through Islamic microfinance. IDB president Bandar Hajjar was speaking at the "Partnerships for Promoting Women’s Economic Empowerment" session at the 43rd annual IDB meeting in Tunis. He said the empowerment of women was at the core of the Bank’s development strategy. He announced that to achieve this, the bank would launch a new initiative called "SheCan". He also stressed the bank continued its regular operations to empower women in priority sectors, such as energy, education, transport, health and Islamic finance. Representatives of 57 member states, senior government officials and ministers of finance, economy, planning and international development are attending the five-day meeting in Tunis.

Gotta Have Faith: A Biblically Responsible #Investment Strategy

There are several ways for financial advisors to diversify an investment portfolio. For example, the James Biblically Responsible Investment ETF (JBRI) tries to reflect the performance of the James Biblically Responsible Investment Index. Indexing methodology screens out or excludes companies engaged in activities that are objectionable from a biblical perspective. This type of indexing methodology is a subset of the broader socially responsible investing branch of investments where investors try to achieve profitable investment goals while still adhering to one's principles. According to James Investment Research, JBRI is constructing a portfolio comprised of the most attractive stocks meeting Christian principles and criteria. The fund can be used as a core equity holding, an ESG option, or as a Smart Beta holding.

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