The IFSB issues Exposure Draft of Guidance Note 7 on Sharī`ah-Compliant Lender-of-Last-Resort Facilities for Public Consultation
Date posted: 7 May 2019
7 May 2019, Kuala Lumpur, Malaysia – The Islamic Financial Services Board (IFSB) has today issued Exposure Draft of Guidance Note-7 on Sharī`ah-Compliant Lender-of-Last-Resort Facilities (ED GN-7) for a two-month Public Consultation period starting 7 May 2019 until 5 July 2019, and invites comments from central banks, regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services (IIFS), academics and other interested parties.
The aim of ED GN-7 is to complement existing IFSB guidance on Sharī`ah-compliant lender of last resort (SLOLR) and to offer international benchmark guidelines to regulatory and supervisory authorities (RSAs) for developing and offering SLOLR facilities as part of the financial safety net arrangement for IIFS in their jurisdictions.
ED GN-7 is primarily intended to serve as a benchmark for Central Banks (CBs) in establishing and operationalising an SLOLR framework that applies to full-fledged Islamic commercial banks and Islamic commercial banks that are subsidiaries of conventional banks. The ED covers several essential features of an SLOLR arrangement, including the preconditions for developing and implementing an SLOLR mechanism; eligibility criteria to access SLOLR; a non-exhaustive selection of Sharī`ah-compliant structures and mechanisms that CBs could utilise for SLOLR purposes; the applicability of penalty rates to these mechanisms; Sharī`ah-compliant eligible collateral; and the relevant disclosures to be made by CBs to IIFS in their jurisdictions.
In line with the IFSB due process on the development of Standards and Guidance/Technical Notes, the IFSB will be organising a public hearing on 18 June 2019 in Kuala Lumpur, Malaysia to invite and solicit feedback on the Exposure Draft and its contents. A Webinar will also be held on 19 June 2019, details of which will be announced in due course. Participation in the Public Hearing and Webinar is free and open to all.
The softcopy of ED GN-7 is available on the IFSB website, www.ifsb.org and the IFSB Secretariat invites all interested parties, especially members of the IFSB, to send their comments on ED GN-7 to the Secretariat through email at firstname.lastname@example.org latest by 5 July 2019.
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