Efforts To Enhance Cross-border Regulatory, Supervisory Cooperation Arrangement Are Priorities: Zeti

PETALING JAYA, July 22 (Bernama) -- Efforts to strengthen cross-border regulatory and supervisory cooperation arrangements in the relevant jurisdictions are priorities as Islamic finance become more internationalised.

Source from (Bernama): http://www.bernama.com/bernama/v7/bu/newsbusiness.php?id=965275
Published: July 23, 2013

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said the arrabgements are needed to further strengthen the international financial infrastructure for Islamic finance.

"We are now witnessing a wave of the internationalisation of Islamic finance as the role of Islamic finance has expanded to become significantly more globalised.

"This has resulted in domestic Islamic financial systems to become more inter-connected and with the consequence that integrated, risks are more rapidly transmitted across the financial system," she said in her introductory remarks at the launch of the second edition of the book entitled "Islamic Finance: The New Regulatory Challenge" here Monday.

Zeti said that as the country advanced forward, this would be of great importance to promote stability and confidence in the more challenging international environment.

Building on the foundations that have been put in place with the adoption of prudential standards introduced by the Islamic Financial Services Board (IFSB) in the key areas of capital adequacy, risk management, corporate governance and Shariah governance, she said the regulatory, supervisory and legal frameworks will need to reflect the growing cross-border dimensions of Islamic finance and its increased connectivity.

She said that a key area for cooperation that is being advanced relates to the provision of a robust liquidity management infrastructure for Islamic finance, which is an important imperative to ensure the resilience and stability of the Islamic financial system, as well as to reduce the cost of intermediation.

Zeti said a significant regulatory challenge remains in terms of having efficient cross-border liquidity risk management in the Islamic financial system due to the lack of short-term Shariah-compliant instruments in international currencies.

"A chapter in the book describes the regulatory response to the issue of liquidity risk facing Islamic financial institutions, including the important role of the International Islamic Liquidity Management Corporation in facilitating cross-border liquidity management," she said.

With these changes set to re-define the financial landscape going forward with far-reaching implications, the publication of the book was both timely and relevant, she said.

"Six years from its first edition in 2007, which made an important contribution to the literature on the regulation of Islamic finance, this second edition captures the diverse range of current information and updates arising from the regulatory issues in a post-crisis global economy," Zeti said.

The book was edited by the Global University of Islamic Finance Adjunct professors Prof Datuk Dr Rifaat Ahmed Abdel Karim and Prof Simon Archer.

-- BERNAMA