Core Principles for Islamic Finance Regulation (Banking Segment)
IFSB-17 contains 33 Core Principles for Islamic Financial Regulation [Banking Segment] (CPIFR) which provide a minimum international standard for sound regulatory and supervisory practices for the effective supervision of institutions offering Islamic financial services (IIFS). The Standard aims to protect consumers and other stakeholders by ensuring that the claim to Sharī`ah compliance made explicitly or implicitly by any IIFS is soundly based; safeguard systemic stability by preserving the linkages between the financial sector and the real economic sector which underlie Islamic finance; and ensure that IIFS act in accordance with their fiduciary responsibilities in all their operations, especially in regard to investment account holders (i.e. investors in profit-sharing investment accounts).
The IFSB envisages that these Core Principles will be used by jurisdictions as a benchmark for assessing the quality of their regulatory and supervisory systems, and for identifying future work to achieve a baseline level of sound regulations and practices for Islamic finance. The CPIFR will promote further integration of Islamic finance with the international architecture for financial stability, while simultaneously providing incentives for improving the prudential framework across jurisdictions so that it is harmonised and consistently implemented across the globe. Furthermore, the CPIFR may also assist IFSB member jurisdictions in: (a) the International Monetary Fund (IMF) and the World Bank financial sector assessment programme (FSAP); (b) self-assessment; (c) reviews conducted by private third parties; and (d) peer reviews conducted, for instance, within regional groupings of banking regulatory and supervisory authorities.
The assessment methodology is included in the IFSB-17 document and was published simultaneously with the CPIFR.