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15 May | Friday
Upcoming 12th IFSB Annual Summit Buoyed by Encouraging New Developments in Global Islamic Finance

Kuala Lumpur, 14 May 2015 - As key Islamic finance regulators and thought leaders converge on the commercial capital of Kazakhstan, Almaty, for the 12th Annual Summit of the Islamic Financial Services Board (IFSB), the world of Islamic finance is buoyed by a series of encouraging developments in the weeks leading up to the Summit. The Summit is scheduled to be held on 20-21 May 2015, hosted by the National Bank of Kazakhstan.

Global Developments
With continued uncertainty about economic recovery in key parts of the global economy, there is increased interest in the strong growth performance of Islamic finance which has been sustained since the onset of the global financial crisis. Sovereign Sukuk issuances by non-traditional markets such as the United Kingdom, Luxembourg and Hong Kong SAR are part of this phenomenon, which seek to tap the wide investor base and deepening pools of Shari`ah-compliant savings globally. At the same time, wide ranging reforms are underway in jurisdictions in both Asia and the Middle East to integrate Islamic finance into the full range of governmental expenditure plans for economic and social development. Equally important, international institutions such as the International Monetary Fund and the World Bank are developing their capabilities to support the stability and resilience of Islamic finance, as well as to promote innovative approaches to funding investments in social and physical infrastructure through “Green” and “Social Sukuk”. On the regulatory side, the IFSB’s new standards are providing a common and consistent reference point for Islamic financial jurisdictions to strengthen the regulatory framework for stability, and to respond to the new Basel III capital and liquidity management frameworks. This can be seen, among others, through the issuance of a series of IFSB standards on stress testing, liquidity management, capital adequacy and an enhanced post-crisis supervisory review process.

These developments take place alongside strong private sector activity, especially on the Sukuk front. The Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the Islamic Development Bank (IDB) Group has won mandates from three countries, namely Jordan, Ivory Coast and Senegal, to assist them in issuing Sukuk. Dubai’s Noor Bank is the latest heavyweight entity to issue a debut $500 million Sukuk Wakalah. Kuveyt Turk Participation Bank issued its debut MYR300 million Sukuk Murabahah in the national Malaysian market. The syndicated Murabahah market continued to flourish alongside the proliferation of Suk?k with AlBaraka Turk Participation Bank raising $268 million from such a facility. The first Shari`ah-compliant insurance product was launched through Lloyd’s of London by XL Group and Cobalt Underwriting, respectively. Malaysia’s i-VCAP launched its third ETF (Exchange Traded Fund). The Central Bank of Bahrain launched a new Wakalah liquidity management instrument.

Islamic Finance in Asia
The IFSB has, on 4 May 2015 launched with the Asian Development Bank (ADB) a timely joint publication titled: “Islamic Finance for Asia: Development, Prospects, and Inclusive Growth” to promote better understanding of the Islamic financial services industry in Asia.

The publication is a valuable reference for jurisdictions in other regions that aim to understand, introduce and develop Islamic finance. It also aims to increase the awareness on Islamic finance among ADB’s member countries, as a potential source for financing infrastructure projects, diversifying public debt management as well as improving the supply of high quality liquid instruments.

Core Principles for Islamic Finance Regulation
The transformational impact of the Islamic finance industry can only be truly enhanced inter alia if the requisite prudential and supervisory infrastructure is in place. As such, issues relating to ‘Core Principles for Islamic Finance: Integrating with the Global Regulatory Framework,’ the Summit theme, is pertinent and follows the adoption last month by the IFSB of a new Standard on Core Principles for Islamic Finance Regulation (CPIFR)(Banking Segment) (IFSB-17). CPIFR was developed with the input from the IMF/World Bank, as well as other important partners of the IFSB, and comes under the World Bank’s Financial Sector Assessment Program (FSAP) – for the banking, insurance and capital markets sectors to assess the strength and effectiveness of regulation and supervision.

The main objective of the CPIFR is to provide a set of Core Principles – along with the associated assessment methodology – for the regulation and supervision of the Islamic financial services industry (IFSI), taking into consideration the specificities of the institutions offering Islamic financial services (IIFS) in the banking segment, the lessons learned from the financial crisis, and the objective of complementing the existing international standards, principally the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision.

The IFSB also envisages to prepare, in the coming years, Core Principles for the Islamic insurance (Takaful) and Islamic capital market sectors.

Prudential and Structural Islamic Financial Indicators
The IFSB has also cooperated with both the ADB and the Islamic Development Bank to develop a set of indicators called Prudential and Structural Islamic Financial Indicators (PSIFIs) on the financial soundness and growth of the Islamic banking systems in 15 IFSB member countries, which were released earlier this month. Data on other countries will also be released as the PSIFI Platform develops.

The indicators are the first set of internationally comparable measures of the soundness of Islamic banking systems and are based on the IMF Financial Soundness Indicators (FSIs) on the strength or vulnerabilities of financial systems. They are, however, customised to the specific characteristics of Islamic banking and finance.

The 12th IFSB Annual Summit
The above issues will form the core of the discussions at the 12th IFSB Summit in Almaty with focus on the new regulatory developments, policy and market trends in the global Islamic financial services industry, concluding with a Panel Discussion on ‘The New Silk Road: The Importance of Regulatory Cooperation for Cross-Border Integration.’

Opening Keynote Addresses on 20 May 2015 will be delivered by the Right Honourable Karim Massimov, the Prime Minister of the Republic of Kazakhstan and The Honourable Akhmetzhan Yessimov, The Mayor of the Almaty City, Kazakhstan, while the Gala Dinner Keynote will be delivered by Dr. Hamed Hassan Merah, Secretary-General of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

The speakers include regulators from Jordan, Kazakhstan, Luxembourg, Malaysia, Pakistan, Qatar, Turkey and the UAE, and senior representatives from the Arab Monetary Fund, International Monetary Fund, the Islamic Cooperation for the Development of the Private Sector, the World Bank, and corporates and other entities involved in the global Islamic finance industry.

The Summit is also complemented by the traditional pre-Summit events, which will be held on 19 May 2015. They are:

  • IFSB Meet the Members and Industry Engagement Session
  • Industry Development Session by The World Bank
  • INCEIF-MIFC Business Forum
  • IFSB-IRTI Mid-Review of the “Islamic Financial Services Industry Development: 10-Year Framework and Strategies’
  • Kazakhstan Country Showcase

The pre-Summit events are an important platform for IFSB members and non-members to articulate their Islamic finance initiatives, incentives and experiences in adopting and supporting the growth of a sound and stable Islamic financial services industry.

The 12th Annual IFSB Summit is specifically aimed at harnessing the latest developments and innovation in regulation, prudential standards, current market practices and future challenges to keep you informed about the global Islamic financial services market; to provide a platform for dialogue with your peers; and to give you a voice in contributing to the future direction of the industry.

Please visit www.ifsb.org or www.ifsbkazakhstan2015.com for more information.

Media Contact:
Mrs Siham Ismail
Tel: 6 03 9195 1430
Email: siham@ifsb.org

 

source: ISLAMIC FINANCIAL SERVICES BOARD
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