العدد الحالي: ايلول/ سبتمبر 2018       اختر عدد :
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The 76th edition of the Global Islamic Economics Magazine GIEM

Abdelilah BELATIK

Secretary General of CIBAFI

Welcome to the 76th edition of the Global Islamic Economics Magazine (GIEM). As always, it is our pleasure to keep you informed with the current updates and prospects of the global Islamic financial services industry (IFSI). The GIEM also serves as a platform for CIBAFI to keep its stakeholders informed about its activities and key initiatives.

This period marks ten years since the global financial crisis (GFC) that hit the global economy causing serious damage to the financial system globally. In essence, the GFC was due to several factors including reduced underwriting standards for mortgages, the malfunctioning of rating agencies, but most importantly to deregulation in the financial markets; the lack of financial and banking regulations in the US has enabled the creation of highly risky financial products that eventually caused the breakdown of the financial system. Therefore, since the GFC of 2008, the financial markets have seen a significant number of regulatory reforms for the development of a more robust regulatory framework. Factors that contributed to the GFC included also deficiencies in corporate governance; it is well established that well-governed institutions perform better, have increased access to finance, and have a lower risk profile than poorly governed institutions. This contributes in building strong economies, reducing economic instability and enhancing the prospects for long-term growth. As a result, global standard setters such as the Basel Committee on Banking Supervision (BCBS) and the Organisation for Economic Co-operation and Development (OECD) have been updating and strengthening their guidelines on good governance practices since then. The Islamic Financial Services Board (IFSB) published its Guiding Principles on Corporate Governance in 2006 as its standard IFSB-3 to address, within the context of corporate governance, the distinct features of Islamic banks. However, updates to the IFSB governance standards have not taken place after the GFC to reflect the global regulatory enhancements. 

Recognizing the importance that corporate governance has to individual financial institutions, and to the broader economies in which they operate, CIBAFI and the World Bank have been working closely together to support sound governance practices under a Memorandum of Understanding (MoU) signed in July 2015. One of the first outcomes of the MoU was a joint conference organized in Amman, Jordan in September 2015, titled “Corporate Governance for Islamic Financial Institutions: Lessons from Recent Global Developments.” CIBAFI and the World Bank have also published in 2017 a joint report on “Corporate Governance Practices in Islamic Banks” to identify the extent to which Islamic financial institutions (IFIs) in the banking sector are complying with standards for good corporate governance, and to identify some policy priorities which, if implemented, will enhance the quality of governance within Islamic financial institutions.

As part of CIBAFI’s third Strategic Objective of Awareness and Information Sharing, and following the previous initiatives taken, CIBAFI and the World Bank will be organising their second joint international conference on “Corporate Governance of Islamic Financial Institutions: Overcoming Challenges and Implementing Best Practices” in Kuala Lumpur, Malaysia on the 2nd October, 2018. The 2nd edition of the International Conference on Corporate Governance in Islamic financial institutions comes in succession to the highly successful first joint conference, aiming to reinforce both, CIBAFI and the World Bank’s commitment, to help foster the development of Islamic finance globally including in the developing markets in the area of Corporate Governance. The conference brings together various Corporate Governance stakeholders from the Islamic finance industry, multilateral institutions, international and national regulatory bodies, policy-makers, and academia to discuss emerging issues such as board effectiveness, risk management, transparency and reporting requirements, as well as the role, accountability and independence of Shariah Supervisory Boards (SSB) in the light of strengthening regulatory regimes. The conference provides an excellent platform to share best practices in corporate governance in the face of compelling and pre-emptory regulatory regimes. 

Aligned with CIBAFI’s Fourth Strategic Objective of Professional Development and in particular, CIBAFI’s endeavour to enhance capacity building in the IFSI, CIBAFI has organised its Technical Workshop on Products Development and Financial Engineering for Islamic Financial Institutions, which was held on 17 – 19 September 2018 in Amman, Jordan, and which was kindly hosted by the Central Bank of Jordan. The Technical Workshop was delivered in Arabic language and focused on products development and financial engineering in Islamic finance, targeting the professional staff of Islamic banks and financial institutions. It aimed to engage participants in the discussion on how Islamic principles can be used to develop financial products by introducing the principles that form the building blocks of contemporary Islamic financial products and to discuss the more intricate issues relating to products development processes. The Technical Workshop witnessed more than 50 participants, from 8 countries and was organized in the Institute of Banking Studies of the Central Bank of Jordan, with a strategic partnership of Jordan Islamic Bank and support of Islamic Insurance Co.

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