International Monetary Fund (IMF)

IMF acknowledges #Islamic #banking's prolific growth

The International Monetary Fund (IMF) has been a proactive supporter of Islamic banking and has declared it a priority for its operations in countries with Islamic banking. In a recent report titled "Ensuring Financial Stability in Countries with Islamic Banking", IMF economists have created a plan of action that would have game-changing implications for the industry. The report acknowledges the progress achieved in developing prudential standards, but concludes that the current framework governing the global industry contains many gaps. Particular attention needs to be paid to developing resolution, financial safety nets, such as deposit protection insurance and a lender of last resort, and liquidity management frameworks. According to IMF, the emergence of complex hybrid Islamic financial institutions and products is a regulatory challenge.

Legal and regulatory framework for #Islamic #banking needs tightening: IMF

According to the International Monetary Fund (IMF), the current framework governing Islamic Banking contains many gaps that need to be closed through the development of a more comprehensive enabling environment. In a recently adopted staff paper “Ensuring Financial Stability in Countries with Islamic Banking”, the IMF calls for further strengthening of the legal and regulatory environment and institutional framework in countries that have Islamic banking. The study notes that Islamic banking has established a presence in more than 60 countries and has become systemically important in 14 jurisdictions. International guidance is needed to address the limited progress that has been achieved in developing financial safety net frameworks. Country practices have diverged on several important fronts. The emergence of hybrid financial products in Islamic Banking that replicate aspects of conventional finance in an Islamic Banking context has raised financial stability concerns. The IMF has been providing technical advice to member countries for the past 20 years and plans even more involvement in policy advice and capacity development.

Syndicate content