IFSB Organises Public Hearings on Exposure Drafts Today
Date posted: 18 June 2019
Kuala Lumpur, 18 June 2019 - The Islamic Financial Services Board (IFSB) is organising its Public Hearings for the two new Exposure Drafts on Core Principles for Effective Islamic Deposit Insurance Systems and Guidance Note (ED CPIDIS) on Shariah-Compliant Lender-of-Last-Resort Facilities (ED GN-7) today. Malaysian Deposit Insurance Commission is the host for the two Public Hearings which are held in Kuala Lumpur, Malaysia.
These Public Hearings are held within the Public Consultation period of the documents, and are part of the IFSB due process for the development of standards and guiding principles as outlined in the IFSB Guidelines and Procedures for the Preparation of Standards/Guidelines.
The Exposure Drafts, which are available for download from the IFSB website, were issued on 5 May 2019 (ED GN-7) and 22 May 2019 (ED CPIDIS) respectively. Public feedback or comments are welcomed before the public consultation ends on 5 July 2019. A Webinar (Web Seminar) will be held on 26 June 2019, participation in the Webinar is free and open to all.
Exposure Draft: Core Principles for Effective Islamic Deposit Insurance Systems (ED CPIDIS)
The main objective of the CPIDIS is to provide a set of core principles for the development and implementation of an effective Islamic deposit insurance system (IDIS), taking into consideration the specificities of Islamic banks, while complementing the existing international standards, principally the International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems (November 2014). In particular, the objectives of the CPIDIS are to:
- serve as a benchmark international framework to facilitate the development and implementation of effective IDIS;
- enable the existing IDISs to identify best-practice gaps in their current modalities; and
- facilitate an independent, third-party or self-assessment of the compliance of an IDIS with CPIDIS.
The CPIDIS has been jointly developed by the IFSB in collaboration with the IADI. The IADI and IFSB envisage that jurisdictions will use these CPIDIS and their compliance assessment methodology as a benchmark for assessing the quality of their IDIS and for identifying gaps in their Islamic deposit insurance practices, including measures to address them. Overall, the CPIDIS will promote further integration of Islamic deposit insurance with the international architecture for financial stability.
ED GN-7: Guidance Note on Shariah-Compliant Lender-of-Last-Resort Facilities
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.
Information on the Public Hearings, as well as softcopies of ED CPIDIS and ED GN-7 are available on the IFSB website - www.ifsb.org.
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