ADB to promote Islamic finance

MANILA, PHILIPPINES: A Memorandum of Understanding (MOU) to facilitate international cooperation between the Islamic Financial Services Board (IFSB) and the Asian Development Bank (ADB) in promoting the development of Islamic finance in common developing member countries was signed this week at the ADB headquarters in Manila.

“The importance of Islamic Finance in the development of Asia cannot be doubted, as can be seen by the significant increase in Shari’ah compliant financing in a number of ADB’s developing member countries in recent years,” said ADB Vice President for Knowledge Management and Sustainable Development Bindu Lohani. “We look forward to working even more closely with IFSB under this MOU to address some of the key issues facing our member countries in the areas of financial inclusiveness and infrastructure financing.”

Lohani and IFSB Secretary-General Jaseem Ahmed signed the MOU on behalf of their institutions.

The MOU provides an effective basis for joint activities and general cooperation in areas of common interest, with the following objectives specified: Enhancing cooperation in the form of joint technical assistance and/or policy-based work in Common Developing Member Countries; Promoting the development of Islamic finance, in particular strengthening the capacity of regulating and supervising Islamic financial services institutions, Islamic capital markets and Islamic liquidity management in Common Developing Member Countries and stimulating joint research and exchange of information, which will be used as critical evidence to support policy areas of mutual interest, as well as to enhance knowledge-sharing between both organisations.

Ahmed thanked ADB for its longstanding support for Islamic finance, and noted that the MOU formalises a partnership between IFSB and ADB going back to the provision of the first Technical Assistance by the ADB for Islamic finance in 2005. He underlined that the MOU was designed to serve both institutions and their respective mandates.

“In the context of Asia’s developmental needs, and the expanding potential for Islamic finance in the region, the MOU strengthens our ability to jointly support the policy, institutional and capacity requirements for a more resilient Islamic financial sector. I especially look forward to working with ADB in encouraging cross-border cooperation in the use of Islamic finance to address the challenges of widening financial and social inclusion in Asia, and in meeting Asia’s enormous need for innovative financial mechanisms for its infrastructure spending,” he said.

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.