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Islamic finance body IFSB issues draft guidance on liquidity risk management 

November 4, 2014
Bernardo Vizcaino, Reuters

The Kuala Lumpur-based Islamic Financial Services Board (IFSB) has released draft guidance on liquidity risk management for Islamic banks and a new standard for regulatory supervision, as the industry body tightens oversight of banking practices.

IFSB guidelines allow national financial regulators to have the final say on how they apply standards, but its prescriptive approach is gradually helping to harmonise practices across the industry's core centres in the Middle East and southeast Asia.

Islamic banks face uncertainty over how regulators will treat their deposits, compounded by a lack of well-developed Islamic securities markets.

The IFSB's guidance note on liquidity management aims to clarify the accounting treatment of Islamic deposits and defines the types of high quality liquid assets (HQLA) that Islamic banks can hold to meet regulatory requirements under the Basel III banking standards now being phased in around the world.

Read more: Reuters

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