Islamic banks survive crisis: IFSB official

Islamic banks have demonstrated relative resilience to the global financial crisis but they can be affected like any other financial institution if the crisis continues, according to an Islamic finance expert.

Islamic banks have demonstrated relative resilience to the global financial crisis but they can be affected like any other financial institution if the crisis continues, according to an Islamic finance expert. Talking to The Peninsula on the sidelines of the Qatar Law Forum on May 30, 2009, Professor Refaat Abdel Karim, Secretary-General of the Islamic Financial Services Board (IFSB) based in Malaysia said, “Islamic banks have survived the crisis because they prohibited to participate in toxic assets. However, since the financial crisis have transformed into an economic crisis, these banks can also be affected, like any other financial institution.” He said there was an increased demand for Islamic financing after the global crisis. However to present itself as a global alternative, Islamic financing need to develop a legal infrastructure and liquidity infrastructure. He added that the IFSB had been working towards achieving this goal. The IFSB serves as an international standard-setting body of regulatory and supervisory agencies in Islamic financial services industry that include banking, capital market and insurance. The Board promotes the development of a prudent and transparent Islamic financial services industry through introducing new, or adapting existing international standards consistent with Shari’ah principles, and recommend them for adoption. The 178 members of the IFSB include 42 regulatory and supervisory authorities as well as International Monetary Fund, World Bank, Bank for International Settlements, Islamic Development Bank, Asian Development Bank and the Islamic Corporation for the Development of Private Sector, Saudi Arabia, and 130 market players and professional firms operating in 34 jurisdictions. Malaysia, the host country of the IFSB, has enacted a law known as the Islamic Financial Services Board Act 2002, which gives the IFSB the immunities and privilege  The IFSB is actively involved in the promotion of awareness of issues that are relevant or have an impact on the regulation and supervision of the Islamic financial services industry. This mainly takes the form of international conferences, seminars, workshops, trainings, meetings and dialogues staged in many countries. Link: http://www.cibafi.org/NewsCenter/English/Details.aspx?Id=3590&Cat=0