IMF draws attention to developing Islamic Banking

IMF draws attention to developing Islamic Banking

Islamic Banking has a presence in 60 countries. The industry mushroomed to more than $1.5 trillion in assets last year from about $100 billion in the late 1990s. While it represents less than 2% of global banking assets, its share is much bigger in many countries and has become systemically important (meaning its assets account for more than 15% of the total) in 14 of them, including Malaysia, Kuwait, and Saudi Arabia.

Recently, the Executive Board of the International Monetary Fund (IMF) held its first formal discussion on IB, and adopted a set of proposals on the role that the Fund should play in this area. These proposals, and the case for adopting them, are contained in the staff paper “Ensuring Financial Stability in Countries with Islamic Banking” and the accompanying country case studies paper.

The document points to the need to apply the regulatory and supervisory standards, adopted in 2015 by the Kuala Lumpur-based Islamic Financial Services Board, broadly and consistently.

These include developing robust resolution regimes (to deal with failing banks) and other financial safety nets and expediting the issuance of high-quality liquid assets such as sovereign Sukuk (a type of government-issued security). 


Vestnik Kavkaza

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