العدد الحالي: نوفمبر 2017       اختر عدد :
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The 66th edition of the Global Islamic Economics Magazine GIEM

Abdelilah BELATIK

Secretary General of CIBAFI

Welcome to the 66th edition of the Global Islamic Economics Magazine (GIEM). As always, it is our pleasure to keep you updated with current updates and prospects in the global Islamic financial services industry (IFSI). The GIEM also serves as the platform for CIBAFI to keep our stakeholders informed about our activities and key initiatives.

As part of its first Strategic Objective of Policy, Regulatory Advocacy, CIBAFI submitted its comments to the Basel Committee on Banking Supervision (BCBS) on the Consultative Document (CD) on “Sound Practices: Implications of fintech developments for banks and bank supervisors” on 31st October 2017. CIBAFI has also submitted its comments to the Accounting & Auditing Organization for Islamic Financial Institutions (AAOIFI) on its Exposure Draft (ED) of Governance Standard No. 9: “Shariah Compliance Function” on 9th November 2017.

In its submission to BCBS, CIBAFI pointed out that the BCBS implicitly recognises that fintech firms may have a greater impact in some markets than others. The suggestion is that in less developed banking markets, and particularly where financial inclusion is relatively low, new entrants may be able to use technology to reach consumers who have no, or limited, existing banking relationships. However, although many Islamic banks operate in less developed and low financial inclusion markets, for Islamic banking in particular, the threat of new entrants is smaller due to the Shariah compliance requirements. It is thus an opportunity for Islamic banks to collaborate with fintech firms to enhance financial inclusion. BCBS on the other hand, lays emphasis on the need to maintain Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) controls in fintech-enabled transactions. CIBAFI believes that the AML/CFT issues may be of greater importance to Islamic banks that intend to use fintech solutions, since many Islamic banks are in countries that are regarded as sensitive from an AML/CFT standpoint. In conclusion, CIBAFI highlighted that more comprehensive researches might be needed to assess the macro level effect of fintech, the effect on economy, financial stability, and the way the central banks may still influence the economy via the monetary and other policies.

On the submission to AAOIFI, CIBAFI noted that the ED attempts to define the internal Shariah compliance system within Islamic financial institutions (IFIs) which include banks, Takaful operators, capital market institutions and other similar institutions. CIBAFI indicated that much of the text pertains to institutions of larger sizes, which are able to sustain a number of internal units. It is therefore likely for the standard to be more applicable to banks and Takaful operators than to capital market firms and other similar institutions. Another important matter in the ED is that it states that the Shariah Compliance Department (SCD) is principally a part of management and accountable to senior management. The issue of reporting lines led to a great deal of comments from CIBAFI members, who were keen that the standard should preserve the operational independence of the SCD. The SCD needs to have day to day administrative reporting to senior management, but it also needs direct access to the Shariah Supervisory Board (SSB).

Detailed comments submitted to BCBS and AAOIFI are available on CIBAFI website http://www.cibafi.org.

As part of its second Strategic Objective of Research and Publications, CIBAFI presented its sixth Briefing under the title of “Bancatakaful: Building Synergies, Creating Opportunities”, which is developed to build the awareness among the stakeholders of Islamic banking and Takaful industries about important aspects of bancatakaful. The Briefing reviews developments in bancatakaful and explores important prospects, challenges and opportunities. It also highlights the importance of bancatakaful as a tool for developing takaful industry, especially with the fact that the takaful industry is still a small and an underdeveloped segment in many jurisdictions. The briefing shows that the Takaful sector has a big potential to collaborate with other financial institutions including Islamic banks to grow and strengthen its presence within the industry. On the other hand, the collaboration between Islamic banks and takaful operators will combine value propositions of both Islamic banking and Takaful sectors such as strong linkage with the real economy, risk sharing, and effective risk management, etc.

As part of CIBAFI’s third Strategic Objective of Awareness and Information Sharing, CIBAFI and the Association of the Mediterranean Chambers of Commerce and Industry (ASCAME) and the Chamber of Commerce of Barcelona have successfully launched the 4th Mediterranean Islamic Finance Forum, themed “Islamic Finance: Focus on Strategies for Mediterranean & Africa”, on 23rd November 2017 in Barcelona, Spain. The event has brought together leaders of the banking sector, business leaders, regulator and policymakers from the Mediterranean, Europe and the Middle East. The Forum explored the future of Islamic banking through innovation and strategic regional & international positioning. In conjunction with the Forum, CIBAFI organised a Technical Workshop on Products Development & Financial Engineering for Islamic Financial Institutions (IFIs) on 22nd and 23rd November 2017.

In line with its fourth Strategic Objective, Professional Development, and following successful execution of the two joint Executive Programmes in 2015 and 2016, CIBAFI together with Ivey Business School, launched their third joint Executive Programme on 7th and 8th of November 2017 in Manama, Kingdom of Bahrain, themed “Strategic Thinking, Innovation and Corporate Entrepreneurship and Change Leadership”. The programme provided a world class and highly interactive learning experience for Islamic Financial Institutions (IFIs) Executives from six countries in the domain of strategic thinking, corporate entrepreneurship, and leadership development in face of organizational change.

CIBAFI will continue to focus on important industry issues and help address them as part of its mandate and support the Islamic finance industry to ensure its continued success. Stay tuned!