IDB & IFSB Meet to Reduce Liquidity Gap Faced by Islamic Financial Services

IDB - Jeddah,27.1.09

In a collaborative effort between the Islamic Development Bank and the Islamic Financial Services Board (IFSB), a meeting at IDB headquarters in Jeddah was held recently to discuss liquidity management issues in the Islamic financing sector. A number of key issues were discussed during the one day meeting comprising liquidity management, institutional development, and the role of regulatory and organizing bodies.

The meeting called for the formation of a supervisory board that would work towards developing markets, products and institutions to enhance liquidity for the Islamic Financial Services. The board members will be chosen from the financial services institutions and supported by the IDB. The meeting also recommended the formation of a task force to develop a strategic and operational framework that would facilitate the development of the market for shariah (Islamic Law) compatible products. It was highlighted that the role of these markets should not be limited to providing funding on just a national basis but should also look into dealing with liquidity at a local as well as an international level through an integrated framework.

The meeting was attended by a large number of delegates from a number of central banks and international organizations including the World Bank, the International Monetary Fund, shariah scholars, as well as a number of institutions that provide Islamic financial services. On behalf of the IDB President, Dr. Abdul Aziz Alhinai, Vice President of IDB assured the meeting that since its inception, the Bank had special interest for promoting and developing Islamic financial instruments.

The IDB, along with a few of its strategic partners established a number of institutions with the objective of laying the foundations for these shariah compatible products.