New 'Guiding Principles' for the Islamic financial services industry
The Council of the Islamic Financial Services Board (IFSB) has resolved to approve the adoption of two new Guiding Principles, dealing with liquidity risk management and stress testing.
The two documents are:
- IFSB-12: Guiding Principles on Liquidity Risk Management for Institutions offering Islamic Financial Services (excluding Islamic Insurance (Takāful) Institutions and Islamic Collective Investment Schemes)
- IFSB-13: Guiding Principles on Stress Testing for Institutions offering Islamic Financial Services (excluding Islamic Insurance (Takāful) Institutions and Islamic Collective Investment Schemes)
IFSB-12 delineates a set of guiding principles for the robust management of liquidity risk by institutions offering Islamic financial services (IIFS) and their vigorous supervision and monitoring by supervisory authorities, taking into consideration the specificities of the IIFS, while complementing relevant international standards and best practices.
The Guiding Principles in IFSB-13 aim to provide a set of guidance intended to complement the existing international stress testing framework taking into consideration the specificities of IIFS as well as the lessons learned from the financial crisis so as to contribute to the soundness and stability of the IIFS, in particular, as well as the Islamic financial services industry as a whole.
Click for more information (link to IFSB website).