The 19th Islamic Financial Stability Forum (IFSF) themed Natural Alliance between Sustainable Development Goals (SDGs) and Islamic Finance: Financial Stability Perspective, held during the Welcome Dinner co-hosted by Bangladesh Bank and Bank Negara Malaysia on 28 April 2019 in Kuala Lumpur, saw speaking session by Mr. Abayomi A. Alawode, Head of Islamic Finance, Finance, Competitiveness & Innovation at The World Bank.
The 19th Islamic Financial Stability Forum was attended by sixteen central bank Governors and Deputy Governors of regulatory and supervisory authorities including senior representatives from among the IFSB members and more than 100 delegates from 22 jurisdictions and the Islamic Development Bank.
Mr. Abayomi touched on the link between the SDGs and Islamic finance with emphasis on potential of the latter in the attainment of the former in ending poverty, protecting the planet, and ensuring inclusive prosperity for all. He highlighted that the SDGs are particularly critical in the member countries of the Organisation of Islamic Cooperation (OIC) as 40 percent of the world’s poor who live on US$1.25 a day or less and one-third of the global population now living in extreme poverty reside in OIC countries.
Mr. Abayomi stated that the foundations of Islamic finance that support socially inclusive and development-oriented activities make it suitable for deployment in pursuit of the 2030 Agenda and the elimination of poverty. He further stated that given Islamic finance direct link to physical assets and the use of profit-and-loss-sharing arrangements, Islamic finance encourages the provision of financial support to productive enterprises that can increase output and generate jobs. He also reinforced the importance of Islamic social finance instruments which can help support the poor and vulnerable groups in the society. He, however, asserted that, the natural affinity of the SDGs and Islamic finance requires a lot of work to be done by various stakeholders to ensure the linkages becomes a reality.
On this note, Mr. Abayomi underscored the need for prudent and responsible provision of financial services, as only safe and sound Institutions Offering Islamic Financial Services (IIFS) and markets can support the SDGs. He called on all the Regulatory and Supervisory Authorities (RSAs) to place extra emphasis on financial stability as a prerequisite for Islamic Finance operations in support of the SDGs. He highlighted some of the key elements of Islamic financial stability to include; strengthening of risk management practices, corporate and Shari’ah governance practices, as first line of defence of IIFS; enhancing regulatory and supervisory frameworks, by implementing the IFSB Core Principles for Islamic Finance Regulation; enhance off-site surveillance & stress testing as well as on-site supervision and enforcement; financial safety net and failure resolution and capacity building for regulators and market players.
The IFSF is a high-level platform open to regulatory and supervisory agencies, international multilateral organisations, IIFS and other stakeholders from among the IFSB members to discuss current and pertinent stability issues faced by the Islamic financial services industry. The 19th IFSF was organised by the Islamic Financial Services Board (IFSB) in conjunction with the 34th Meeting of the Council of the IFSB and 17th General Assembly, and was co-hosted by Bangladesh Bank and Bank Negara Malaysia.
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About the Islamic Financial Services Board (IFSB)
The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, broadly defined to include banking, capital markets and insurance sectors. The IFSB also conducts research and coordinates initiatives on industry-related issues, as well as organises roundtables, seminars and conferences for regulators and industry stakeholders. Towards this end, the IFSB works closely with relevant international, regional and national organisations, research/educational institutions and market players.
The members of the IFSB comprise regulatory and supervisory authorities, international inter-governmental organisations and market players, professional firms and industry associations.
For more information about the IFSB, please visit www.ifsb.org.
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