IslamicFinance.de

Regulatory proposals for a liquidity coverage ratio for Islamic financial institutions could help address some of the industry's long-standing weaknesses, particularly the lack of high quality liquid assets (HQLA), Standard & Poor's Ratings Services said in the report “Basel III Requirements Could Strengthen Islamic Banks' Liquidity Management”. Moreover, last year, the Islamic Finance Services Board (IFSB) published guidance on quantitative measures for liquidity management in institutions offering Islamic financial services. This note set three main characteristics of high quality liquid assets (HQLA): low correlation with risky assets, an active and sizable market, and low volatility.