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Global #debt may be understated by $13 trillion - BIS

Global debt may be under-reported by around $13 trillion because traditional accounting practices exclude foreign exchange derivatives. Bank for International Settlements (BIS) researchers said it was hard to assess the risk this missing debt poses, but that the main worry was a liquidity crunch like the one that seized FX swap and forwards markets during the financial crisis. The $13 trillion exposure exceeds the on-balance-sheet debt of $10.7 trillion that was owed by firms and governments outside the United States at end-March. The fact these FX derivatives do not appear on balance sheets means little is known about where the debt lies. According to Claudio Borio, head of the BIS's monetary and economic department, the debt remains obscured from view.

Islamic Development Bank Group is investing more than US$2 billion into projects in #Kazakhstan

The Islamic Development Bank (IDB) is investing more than US$2 billion into innovative projects in Kazakhstan. The three major initiatives are the establishment of an organization on food security of Muslim countries, a project of integration of Islamic infrastructure and the establishment of the Astana International Financial Center. IDB CEO Bandar Bin Mohammed Hajjar said the investment would strengthen the bilateral relationship between the IDB and government of Kazakhstan. The IDB has recently established the Foundation for Development of Science, Technology and Innovation. In addition, the bank undertakes the creation of the cooperation ecosystem, which should unite efforts of governments, businessmen and scholars of Islamic countries, and allow to realize the most advanced ideas into ready-made, commercial products.

#Algeria turns to Islamic finance, bourse to rescue 'worrying' economy

Algeria’s new government will introduce Islamic finance and develop its stock market to draw more investment into the economy. The country currently struggles to cope with a sharp fall in energy earnings. Prime Minister Ahmed Ouyahia plans wider reforms and the start of fracking for shale hydrocarbons to boost oil and gas revenue. Algeria's finances have been hit by a more than 50% drop in crude oil prices since mid-2014, the government said 2017 would end with real difficulties, while 2018 looked to be even more complex. Algeria has failed in the past to modernise its stock market and has a very low level of liquidity. Its firms currently rely on state finances, which in turn depend on the oil and gas sector. The government plans to continue spending cuts, including subsidies, but analysts say spending cuts alone may not be enough to tackle the crisis. Foreign exchange reserves fell to $105 billion in July this year from $193 billion in May 2014.

Advancing financial #inclusion for #Indonesian #women

Commonwealth Bank and Mastercard announced a collaboration to better financial inclusion for Indonesian women. This collaboration will have three key pillars: enhancing formal networks by knowledge exchange among women-owned businesses, innovating through new digital learning tools and investing in research. Early in 2017, Indonesia’s Financial Services Authority (OJK) released a research showing that Indonesia’s financial literacy and inclusion indices stood at 29.66% and 67.82%. OJK called upon the industry to implement inclusion programmes to achieve their target of 75% for the financial inclusion index by 2019. Commonwealth Bank and Mastercard will help drive the growth of women-owned businesses by educating them about customer and market trends. Additionally, both will invest in research to continue the conversation about financial inclusion.

#Kurdistan pays $1 billion to Dana Gas, partners to settle London case

#Iraq’s Kurdistan region will immediately pay $1 billion to UAE-based Dana Gas and its partners to settle a long-running London court case. The full and final settlement of the $2.24 billion case is the latest effort by the semi-autonomous region to put its finances in order ahead of a referendum seeking independence from the government in Baghdad. Kurdistan has ramped up oil sales independent from Baghdad and is hoping to raise gas exports. The settlement is significant for both parties, with Kurdistan settling the dispute at a time it is working on reshaping public finances. For Dana, the Kurdish settlement will be eagerly watched by its bond holders which are disputing Dana's move to restructure its $700 million sukuk on the grounds it is no longer sharia-compliant.

Digitisation of #Indonesian Banks

Consulting firm Solidiance launched its new report entitled Digital Evolution in Indonesia's Banking Industry. In this report millennials are projected to account for around 58% of Indonesia's total population by 2027. Indonesia has a population of more than 260 million people and only 36% of the population are connected to financial institutions, leaving in the region 150 million citizens unbanked. The report also noted that digitalization helps provide greater opportunities for banks to seize the market share. The market will be soon occupied with digital-native millenials who prefer to use the new channels available them. The Solidiance report estimated the number of Internet users in Indonesia is expected to explode in the coming years from as low as 35% of the population in 2015 to an estimated 68% in 2020.

DFSA launches #crowdfunding framework

The Dubai Financial Services Authority (DFSA) launched its regulatory framework for loan and investment-based crowdfunding platforms. The DFSA crowdfunding regulations have the ability to catalyse growth in the FinTech industry by targeting the specific requirements of crowdfunding platforms. The regulations ensure clear governance for FinTech businesses and provide appropriate protection for their customers. They also formalise the DFSA’s approach to regulating crowdfunding platforms which had operated since 2016. Data provided by the Khalifa Fund shows that approximately 50-70% of SMEs have had their applications for funding from conventional banks rejected. Crowdfunding is expected to grow further in importance in the UAE as entrepreneurs seek alternative sources of funding.

ADGM and KPMG launch #FinTech Abu Dhabi Innovation Challenge

Abu Dhabi Global Market (ADGM) and KPMG have come together to launch the first FinTech Abu Dhabi Innovation Challenge on Oct. 22. The Innovation Challenge includes an intensive five-week program for innovative and mature start-ups to conceptualize and present market-ready solutions that address real business challenges in the Middle East, Africa and South Asia (MEASA) region. During the program, 10 finalist teams will work divided into six focus areas: Financial and Investment Management, Financial Inclusion, RegTech, Trade Finance, InsurTech and Private Capital Markets.The finalists will showcase their solutions at the FinTech Demo Day in Abu Dhabi to a panel of industry experts. Each finalist will benefit from mentoring sessions and fast-tracked consideration for admission to ADGM’s Regulatory Laboratory (RegLab) program. They will also win a $15,000 cash stipend to cover any costs associated with travel matters and accommodation.

Shariah-compliant 1% interest on #studyloans ‘can’t be abolished’

Shamsul Anuar Nasarah, chairman of the National Higher Education Fund (PTPTN), says the 1% interest charged on study loans is not to make a profit, therefore it is not right to abolish it. In his view, the cost is minimum and is used to cover the staffing and administrative costs of those who are managing the accounts. Borrowers are charged between 1% and 3% interest, and additionally, their loan amount will increase if they fail to pay their instalments. After the agency's establishment, administrative costs had amounted to 4% a year. It was gradually reduced to 3% a year since January 1, 2004. Now, the interest is only 1% a year, beginning June 1, 2008. In 2017 PTPTN is expected to collect RM4 billion by the end of the year. Higher Education Minister Idris Jusoh said the target was achievable as the agency had collected RM3.4 billion last year, when its target was only RM2 billion.

#UAE Authorities Plan SMB #Crowdfunding Framework

United Arab Emirates (UAE) regulators are setting out to establish a framework to guide the small business (SMB) crowdfunding market. Reports noted that regulators are aiming to promote innovation and a broadening of small business activity. Equity crowdfunding is expected to provide $93 billion to small- and medium-sized enterprises by 2020, reports added. In the UAE, SMBs stand to gain significantly from that trend, as these businesses make up an estimated 85% of all UAE companies. In Dubai, that number is even higher, at nearly 95% of all businesses. Meanwhile, research from the Khalifa Fund for Enterprise Development found that as many as 70% of small business loan applications in the UAE are rejected by traditional banks. Ian Johnston, Chief Executive of the Dubai International Financial Services Authority (DFSA), said the DFSA was the first in the GCC region to formalize a tailored regime for loan and investment crowdfunding platforms, which represent an important source of financing for the SME sector.

New #cryptocurrency launches in Dubai, backed by real economic activity

The Malaysian company Farad launched its Farad cryptoken at the Dubai International Financial Centre (DIFC) on Monday. The CEO of Farad, Wan Hasni, said this was the first cryptocurrency backed by real-economy activity. The Farad cryptoken (FRD) is a digital currency, with each token representing the rights to the forward purchase contract of 80,000,000 ultra-capacitor cells produced by a Chinese company over a period of 36 months. According to company documents, at the time of initial coin offering (ICO), 1 FRD will be equivalent to $12.50. The pre-sale ICO will happen on August 25, and then on September 15 the full sale will begin. Around 1.2 billion FRD will be issued in the ICO, half during the pre-sale and half at the full sale, for a 10% premium. The ICO will be followed by roadshows in Asia and Europe to promote the business.

Why we’ve not paid #dividends yet – #JAIZ #Bank CEO

Malam Hassan Usman, CEO of JAIZ Bank, perfected a partnership with Borno State government on the reconstruction of the state economy.
Usman said, that the fourth branch of JAIZ Bank had been opened in Nigerias Maiduguri about five years ago. And it has so far been getting the strong support of the state government since the branch was opened. So he was in Nigeria to explore the ways and means to reciprocate this kind gesture by the state government. His bank wants to help Governor Kashim Shettima in all his efforts to turn things around, especially now that peace and normalcy are gradually being restored in Maiduguri and the entire state.
JAIZ bank has launched a programme, which is being implemented since the beginning of the rainy season, to provide small-holder farmers with inputs. It is working with the coordinator as well as the private sector partner for the state to provide the seeds, fertilizer and other inputs to the partner. The idea of the state government is to start with 5,000 farmers, which it wants to empower at this initial phase of the programme.

DIEDC opens nominations for 5th Islamic Economy Award

The Dubai Islamic Economy Development Centre (DIEDC) announced the commencement of nominations for the fifth edition of the Islamic Economy Award (IEA). The award is a joint initiative of DIEDC and Dubai Chamber of Commerce and Industry under the directives of Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum. The eight key categories of the Islamic Economy Award 2017 are: Money and Finance, Food and Health, Media, Hospitality and Tourism, Waqf and Endowments, SME Development, Islamic Economy Knowledge Infrastructure and Islamic Arts. In addition to the eight main categories, the Lifetime Achievement Award recognizes a notable individual, whose work over several decades, has inspired others and had a major positive impact on the Islamic economy.

Amendment of Islamic financing bill pushed

The Mindanao Development Authority (MINDA) is currently pushing to fast track the institutionalization of the Islamic Financing Mechanism. MINDA assistant secretary Romeo Montenegro said they are proposing the amendment in order to have specific mechanisms for full implementation of the Islamic Finance Mechanism. He added the bill in the Senate is already in the committee level and are already waiting for the same version to be filed in the House of Representatives. Montenegro said they wish to have the Islamic Financing Mechanism to pilot at Marawi to help with the reconstruction efforts in the area. It is also targeted to be a channel for the Middle Eastern countries willing to shell out financial support for the victims of the Marawi siege.

E-auction: Why we selected only Jaiz bank – Customs

The Nigeria Customs Service announced that only Jazz Bank was able participate in the first bidding of its e-auction exercise. Joseph Attah, the Customs National Public Relations Officer (PRO), said that Jazz Bank was the only one out of the 23 customs duty collecting banks that accessed the e-auction platform. The PRO said that all the 23 Customs duty collecting banks were carried along and the process was subjected to user acceptability test. Throughout the testing period, no bank indicated any problem with the platform. However, upon launch only Jaiz Bank was discovered to be ready and active on the platform. Attah noted that the first 48 hours bidding period produced 43 winners. Items uploaded were 130 vehicles, 43 people placed their bids and won vehicles.

Cover Story: #Disrupting Islamic finance

For many years, the global Islamic finance has been seen as a laggard in digital innovation, but now Islamic finance players are catching up with their conventional peers. According to Zeeshan Uppal, co-founder of crowdfunding company Yielders, fintech has opened up opportunities for Islamic finance to catch up because it allows scalability, which is in line with shariah law. Ibrahim Mohammed, the founder of OneGram, says that blockchain technology can create digital banks or P2P lending platforms that adhere to Islamic principles, and many other asset classes can be made shariah-compliant. Umar Munshi, founder of EthisCrowd, finds the slow innovation in Islamic finance perplexing as there is an urgent need for financial inclusivity. He expects to see more players in the takafultech, crowdfunding and P2P financing, payment and remittance, and smart contract space next year. According to EY’s Banking in Emerging Markets GCC FinTech Play 2017 report, Fintech can propel Islamic banks into the mainstream space in 20 promising markets by 2021, up from five markets today, and effectively add 150 million new Islamic banking customers.

Satyajit Das: Banking problems redux

There are over $3 trillion in stressed loan assets globally and the World Bank estimates that the current ratio of non-performing loans (NPLs) to total gross loans is around the 2009 levels of 4.2%. European banks have around euro 1.2 trillion of problem loans. Banking systems in many other advanced economies also face increasing risks. NPL problems are also apparent in India, China and Brazil. Solution of banking crises requires strong earnings, capital infusions, isolation of bad loans and industry reforms. But the ability of banks to earn their way out of the crisis to allow losses to be written off is limited. Banking problems represent a major source of continued economic instability. In modern economies, the financial system acts as a reservoir of bad debts, which can create financial crises. A new such episode may be beginning.

Why Islamic finance is insufficiently innovative

There are three possible explanations to the question why innovation might be slower in Islamic finance than in the conventional finance industry. These are the size of the industry, cultural factors and religious conservatism. First, the industry is tiny compared with conventional finance, Islamic finance assets are only 1.07% of total financial assets. Culturally, Muslim majority countries display much more respect for age and seniority than do locations like Silicon Valley or London. Finally, there is the question of religious conservatism. The rules of traditional Islamic law have always been derived from the original sources of Quran and hadith, and from past judicial rulings. Requiring all legal developments to be based on prior sources limits the scope for innovation. Mohammed Amin states that fintech can only transform Islamic finance if Shariah scholars are sufficiently agile in developing traditional Islamic law to accomodate innovation.

Business #schools feed hunger for courses on Islamic finance, aboriginal leadership

As the world of business is global, business schools are getting similarly global in their outlook. The need for a more diverse approach in business schools crosses all levels, from the makeup of faculty and the curriculum to the students themselves. Walid Hejazi, associate professor at University of Toronto’s Rotman School of Management stresses that diversity from a business school perspective is not so much a moral or equity imperative as it is about long-term sustainability. In his view, businesses that are diverse in their workforce are not only more innovative, they also work more effectively. Other business schools are following suit emphasising diversity on all levels. For example, the Beedie School of Business at Simon Fraser University introduced an Aboriginal Business and Leadership EMBA program to advance aboriginal leaders’ business education.

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