العدد الحالي: مايو 2017       اختر عدد :
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كلمة المجلس العام

Abdelilah BELATIK

Secretary General of CIBAFI

Welcome to the 58th edition of the Global Islamic Economics Magazine (GIEM).  As always, it is our pleasure to keep you updated with the current updates and prospects in the global Islamic financial services industry. The GIEM also serves as the platform for CIBAFI to keep our stakeholders informed about our activities and key initiatives.

As Islamic banking and finance industry continues to grow rapidly, in size and complexity, international regulatory and supervisory bodies are recognising that Islamic banking has become systemically important in 14 jurisdictions and thus is being now discussed at the international agenda.

CIBAFI as a key piece in the international architecture of Islamic finance has been invited to present our views on Islamic finance developments and prospects at the 9th Annual IIF G20 Conference –‘The G20 Agenda under the German Presidency’, that took place in Frankfurt, Germany on 15 -16 March 2017, ahead of the first Ministerial Meeting of the German G20 Presidency.

Background to this is that back in 2015 as part of CIBAFIs’ Strategic Objective 1: Policy, Regulatory Advocacy, we have submitted our recommendations in a form of Policy Note to the B-20 Turkey Financing Growth Taskforce, with the objective to facilitate SME financing and improve global regulation of markets. The B-20 group, as a platform for business leaders from G-20 economies, has come up with the B-20 Turkey Financing Growth Taskforce in 2015. CIBAFI’s Policy Note presented several recommendations which were of importance to the global Islamic finance industry within the scope of the Taskforce priorities.

The recommendations with respect to the global regulation of markets under the Taskforce priorities included: i) enhancing regulatory consistency and harmonization for Islamic financial institutions; ii) incorporating risk drivers specific to Islamic financial transactions; iii) aligning risk parameters to the nature of emerging economies and SMEs; iv) promoting external rating agencies catering for Islamic finance; v) reducing negative implication of regulatory treatment on Islamic trade finance; vi) revision on risk weight in short-term interbank claims to ease liquidity challenge of Islamic financial institutions (IFIs); vii) appropriate treatment on specialized lending risk weight to promote Sukuk infrastructure financing; and viii) treatment of profit-sharing investment account (PSIA) as potentially loss absorbent. Whilst, the recommendations for promoting SME financing through Islamic finance included: i) adjusting SME scoring according to risk parameters of equity-based financing; ii) comprehensive package through a mixture of SME financing, cash waqf and microtakaful; iii) Shariah-compliant guarantee schemes for SME financing; and iv) entrepreneurs’ skills enhancement and monitoring strategies for equity financing. The above recommendations in form of policy note have been successful incorporated into the 2015 B-20 Financing Growth Taskforce Policy Paper.

Recent developments at the International Monetary Fund (IMF) end, will also certainly reposition Islamic Banking & Finance at the global financial landscape. Hence recent call by the IMF for establishing a policy framework and environment that promotes financial stability and sound development of Islamic banking particularly in 14 countries where Islamic banking has become systemically important.  Following this on 3rd February 2017, the IMF Executive Board held its first formal discussion on Islamic banking which has adopted a set of proposals on the role that the Fund should play in this area.

We should certainly acknowledge hard work of the Fund building to this important announcement, starting from year 2000 when the IMF was facilitating the steering committee meetings for the establishment of the Islamic Financial Services Board (IFSB), through the establishment of the External Advisory Group on Islamic Finance (EAG), of which CIBAFI is an active member) in 2014. A series of policy papers by the IMF staff (working papers) were subsequently developed with feedback from EAG all the way till 2016. The current announcement by the IMF Board in 2017, which has suggested considering recognising the Core Principles for Islamic finance Regulation with proposal to be received by the Board before April 2018. This recognition will be a key milestone as the Core Principles will then be included in the IMF and World Bank Financial Sector Assessment Programme (FSAP) leading the Regulators to implement a regulatory framework for the industry.

With the above development at the Global Agenda CIBAFIs role as the voice of the Islamic financial services industry is rather crucial and challenging, we shall continue to strive toward strengthening the position of the industry at the international arena and facilitating key regulatory agenda developments that take into account views of our stakeholders.

 

Stay tuned!