The IFSB Council Adopts Guidance Note on Quantitative Measure for Liquidity Risk Management (GN-6)
Date posted: 2 April 2015
Jakarta, 2 April 2015 - The Council of the Islamic Financial Services Board (IFSB) has, in its 26th Meeting, resolved to approve the adoption of a new Guidance Note on Quantitative Measures for Liquidity Risk Management in Institutions Offering Islamic Financial Services (Excluding Islamic Insurance (Takāful) Institutions and Islamic Collective Investment Schemes) (GN-6).
The 26th meeting of the IFSB Council, hosted by Bank Indonesia, was chaired by the Governor, Bank Indonesia, and IFSB Chairman for 2015, H.E. Agus D.W. Martowardojo. It was attended by seven central bank governors and heads of regulatory and supervisory authorities, as well as 13 senior representatives from among the Council and Full members of the IFSB, representing 17 countries. The meeting was also attended by the President of the Islamic Development Bank.
GN-6: Guidance Note on Quantitative Measures for Liquidity Risk Management in Institutions Offering Islamic Financial Services (Excluding Islamic Insurance (Takāful) Institutions and Islamic Collective Investment Schemes)
GN-6 aims to complement global liquidity standards such as Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) as well as other developments on liquidity risk management for the Islamic financial services industry (IFSI). It will help the regulatory and supervisory authorities to provide a level-playing field to the IIFS in the application of liquidity standards vis-a-vis their conventional counterparts, and thus will promote the sound management of liquidity risk in IIFS. The objectives of this GN-6 are:
- to complement other prudential standards issued by the IFSB, as well as to support the harmonised application of the international regulatory regime in the area of liquidity risk management by providing guidance on the application of global liquidity standards for the IIFS;
- to provide guidance to supervisory authorities on the application of the LCR and NSFR in their jurisdictions and on their role in assessing the discretionary items specified in this GN, including application of the alternative liquidity approaches (ALA); and
- to delineate the disclosure requirements required alongside the application of liquidity standards.
In the same Meeting, the Council also resolved to adopt a Standard on Core Principles for Islamic Finance Regulation (IFSB-17).
The softcopies of IFSB-17 and GN-6 will be available on the IFSB website, www.ifsb.org in both English and Arabic languages in due course.
The Meeting of the Council was followed by the 13th IFSB General Assembly and the 11th Islamic Financial Stability Forum.
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