IslamicFinance.de

Regulators in developing countries need to find a new approach to supervising digital financial services or they risk hampering the efforts to increase financial inclusion, researchers have warned. Ross Buckley, chair of international finance law and Scientia Professor at UNSW Australia, said over-regulation posed the greatest threat to the development of the nascent fintech industry in developing countries. In many poorer areas the combination of finance and telecommunications technology was the only way to deliver banking services cost-effectively, he said.

CFA Institute, the global association of investment professionals, has launched the results of its first CFA Institute GCC Societies Survey, based on feedback from more than 200 GCC-based CFA charterholders and members from Bahrain, Kuwait, and the United Arab Emirates. The survey highlights economic, investment and employment trends and challenges in the GCC region. The economic outlook for 2016 seems uncertain, with the vast majority of respondents (81%) expect low oil prices to impact the GCC economy. Despite this uncertainty, the possibility of the introduction of Value-Added Tax (VAT), and human resources are dominant themes.

2008 was marked by a banking crisis that had a major impact on the world's economy. While the origins of the crash are still hotly debated, one issue has made a significant impact on the financial world – by and large, the real casualties of the crisis were not banks or financial moguls, but average people. One positive result of the 2008 crash has been a shift in the economic and business sectors towards a more ethical code of practice. There are areas of the economic world that are poised to provide the sound, ethical, and forward-thinking financial services, and for those already working in Islamic Finance the answer to solving and preventing the world's economic woes seems obvious – risk sharing.

Country Director Asian Development Bank (ADB) Werner Leipach, said that ADB was planning to explore opportunities of co-financing from new sources through Islamic Financing and the Asian Infrastructure Investment Bank (AIIB). The AIIB assistance will be sought for the M4 Project, Shorkot-Khanewal Section, near the China Pakistan Economic Corridor. Leipach mentioned that ADB’s total co-financing for Pakistan stood around $1050 million including $400 million grant commitments from DIFD. ADB has also provided trade finance support for the private sector investments to the tune of $95 million.

Islam, which many Americans consider a threat, has a valuable and little-noticed lesson for Western investors. Following Muslims' Shariah law, the religion's investing style avoids highly indebted companies that burn brightly -- and risk fizzling out. Amana funds, the largest U.S.-based family of Islamic-oriented mutual funds, have posted mostly so-so performances since 2009, as corporations worldwide issued a plethora of bonds to take advantage of minuscule interest rates. Unfortunately, widespread unease about Islam in the U.S. obscures the virtues of Shariah funds. Calls for preventing Muslims from entering the U.S. are just part of the trend. Seven states have barred courts from using Shariah law.

The Chartered Institute of Islamic Finance Professionals in Kuala Lumpur is going global as it seeks to fill a void of experts with specialties such as insurance and law. The institute aims to increase membership of qualified practitioners to 3,000 in three years, from 400 now, its president Badlisyah Abdul Ghani said. The CIIF, which changed its name and geographical focus in 2015, is in talks with associations and regulators stretching from the Middle East to Indonesia as part of that campaign, he said. CIIF plans to start offering specialized courses next year to address the shortage of professinals, which is hindering development. The Kuala Lumpur-based Finance Accreditation Agency estimates 56,000 more qualified experts will be needed to fill positions in the next five years as growth accelerates.

The Bank of England has joined the Islamic Financial Services Board (IFSB), the second Western regulator to do so after Luxembourg. The BoE joins as an associate member, the 65th regulatory body to join the Kuala Lumpur-based body, bringing total membership to 189, the IFSB said in a statement. The move comes at a key time for Britain’s domestic Islamic banks, as the BoE works to grow the number of sharia-compliant assets they can use in their liquidity buffers, with progress expected by the turn of the year. The IFSB has also admitted the central bank of Kyrgyzstan and the Securities and Exchange Commission of Pakistan as observer members.

The Islamic Financial Services Board (IFSB) introduced the FIS E-Learning Portal. The portal provides both IFSB members and non-member organisations a learning and knowledge management suite with a number of interactive features that will assist in developing and enhancing knowledge as well as understanding of IFSB standards. The E-modules will cover seven standards which have been transformed into a total of 14 E-Learning modules with a collective seat time of 15 hours. The modules are available by subscription. As an extension of the IFSB membership benefits, a certain number of complimentary subscriptions are made available to organisations from the various categories of IFSB membership.

Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has announced formation of its new technical boards and the names of appointed members of these boards for a 4-year period- up till end of 2019, or until the succeeding boards are appointed. Currently, the standards development, revision, and related technical work programs in AAOIFI are overseen by two technical boards, namely Shari’ah Board and Accounting and Auditing Standards Board. In order to better serve the international Islamic finance industry, AAOIFI has restructured its technical standards boards and enhanced their major responsibilities.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is revamping key standards and boosting its engagement efforts with the industry, part of an ambitious reform agenda for the Bahrain-based body. A revised standard for sukuk and a new one covering the sale of debt are among major efforts planned for next year, secretary-general Hamed Hassan Merah told Reuters in an interview. Industry bodies like AAOIFI have been urged to adapt in a sector that has grown fast but remains fragmented across its core centres in the Middle East and Southeast Asia.

Malaysian central bank Governor Zeti Akhtar Aziz prepares to leave in April after three decades at the central bank. Whoever is chosen as her successor will have very big shoes to fill, said Wellian Wiranto, an economist at Oversea- Chinese Banking Corp. in Singapore. This is especially so since the global environment remains uncertain and Malaysia is deemed relatively vulnerable to swings in global investor sentiment -- in part due to domestic political rumblings. Zeti served as a deputy governor before she took the top job in 2000. The central bank declined to comment on whether any of the three current deputies are in the running this time.

Bahrain-based Tadhamon Capital announced the successful exit from its investment in Coxlease School in Lyndhurst, Hampshire, UK. The school is a specialist residential education facility for children with severe behavioural, emotional and social difficulties. It is let to Priory Group for a 30-year period with annual rent reviews linked to the retail price index. Acquired in November 2010, the school was Tadhamon’s seed investment in its Social Infrastructure Investment Platform in the UK. The platform currently holds assets valued at more than $523 million across segments. Over the five-year investment period, a minimum annual cash dividend of nine per cent was achieved.

The Dubai Chamber of Commerce and Industry recently commissioned a study on the opportunities for Gulf investors in the African market. The research, conducted by the Economist Intelligence Unit (EIU), revealed growing commercial interests between the regions. While trade between the Gulf Co-operation Council (GCC) and Africa remains modest, foreign direct investment (FDI) is growing. For example, a number of African multinationals have set up their headquarters in Dubai, such as Mara Group and Atlantic Holdings. On the other side, the EIU’s research shows that between 2005 and 2014 Gulf firms injected at least US$9.3bn in FDI into sub-Saharan Africa, with a further $2.7bn in the first half of 2015 alone.

As part of its review of the economic outlook for the Islamic Republic of Afghanistan, the International Monetary Fund said financial intermediation in the country needs to become more efficient and broad-based. The IMF noted that the authorities expect that credit availability should increase from its low base, though they recognize that the low private credit reflects the scarcity of profitable and appropriately collateralized lending opportunities and structural challenges. The authorities wish to promote lending to small and medium enterprises (SMEs) and agriculture while developing microfinance to support growth and job creation.

The Islamic Corporation for the Development of the Private Sector (ICD) signed a Memorandum of Understanding (MoU) with the International Islamic Liquidity Management Corporation (IILM). The purpose of the MoU is to establish and implement a framework for the cooperation between the two parties for contribution to economic development and financial inclusiveness in the Asian and African region, and in so doing to enhance the ability of both organisations to achieve their respective objectives and mandates. The MoU was signed by Mr. Khaled Mohammed Al-Aboodi, Chief Executive Officer and General Manager of the ICD, and Professor Datuk Rifaat Ahmed Abdel Karim, Chief Executive Officer of the IILM.

The collapse in the price of oil, which began in June 2014, came as a surprise to industry analysts and insiders. They were quick to place blame on OPEC, for its perceived high production, and on China for slowing demand. The truth includes some of these elements but it is not the entire story. Much of the blame for the fall in the price of oil can be traced back to the U.S. Federal Reserve and financialization of the market. Shale producers are now stuck. Many were not profitable at $100 per barrel and are now faced with bankruptcy unless they can continue to refinance their debt and get new funding, which is highly unlikely at this stage.

Timothy Lyman of CGAP (Consultative Group to Assist the Poor) discussed the interactions among financial inclusion, financial stability, financial integrity (anti-crime) and consumer protection (I-SIP). Referring to previous work by the International Monetary Fund, he said the idea that financial inclusion supports the other three long-term and vice versa is supported by a growing body of research. On the other hand, the message is decidedly not that financial inclusion equals stability. The reality is highly nuanced. Adalbert Winkler of the Frankfurt School of Finance & Management shared his research, which also revealed mixed signals regarding whether financial inclusion supports financial stability.

For financial service providers trying to garner new clients in the developing world, illiteracy awareness is extremely important. Many countries around the developing world still have high rates of illiteracy, and most financial services are not designed well for illiterate users. This means that tens of millions of people around the world cannot be effectively reached with financial services. The Helix Institute is working with financial service providers to help them earn new clients and increase profits. Part of this equation is understanding how products and services can better serve those who cannot read.

Peer-to-peer (P2P) is the capacity that we now have to connect to each other, to create value together and to organise ourselves. It cuts out the middle man, and instead adopts a model of decentralised peer production, whereby value is delivered back to the place where it largely came from in the first place — the commons. In capital markets, labour is viewed as a commodity to be bought and sold. Within peer production labour is viewed as a shared resource for the community. People bring their own skills and services — teaching people, facilitating the transfer of data or goods, and creating value-added products.

The Wall Street Journal (WSJ), in continuing to pursue the story on the 1MDB controversy, has reported that there’s unprecedented attention on a number of Swiss banks and Zurich-based Falcon Private Bank AG, a small wealth manager snapped up by an Abu Dhabi investor during the financial crisis. The Swiss authorities, according to WSJ, are probing suspected money laundering and possible corruption of “foreign officials”. The investigations have landed Falcon in the middle of the controversy around 1MDB. Falcon, which so far hasn’t been accused of any wrongdoing, said the bank was legally barred from answering questions about its clients.