The Islamic Financial Services Board (IFSB) and the Financial Stability Institute (FSI) are jointly organising an IFSB-FSI Seminar on Liquidity Risk in Islamic and Conventional Banks on 28-29 October 2014 in Doha, Qatar, which Qatar Central Bank is kindly hosting.
Global standard-setting bodies and the regulatory community in the past few years have increased their focus on strengthening the monitoring and supervision of the liquidity profile and risk management framework of financial institutions. While these changes reflect the regulatory response to lessons learnt during the global financial crisis, they also reflect the enhanced role of effective liquidity management in ensuring the safety and soundness of the financial systems. These changes will also impact the way banking institutions manage their liquidity as well as capital requirements in the future.
While the conventional financial sector is facing challenges at a broad level, the Islamic financial services industry (IFSI) has its own unique challenges. The tools for liquidity risk management presently available for use by institutions offering Islamic financial services (IIFS) remain rudimentary and markets are insufficiently liquid, leading to inefficiencies in normal times – due to low returns on available liquid assets – as well as the potential for systemic risks in times of crisis, owing to the relatively limited liquidity of the instruments involved. Adopting the new regulatory developments – such as Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) – for the IIFS is necessitated by the fact that Islamic finance is rapidly being mainstreamed in many jurisdictions and increasingly integrated into global financial markets.
This Seminar aims to discuss issues related to the management of liquidity risk in both conventional and Islamic banking institutions in the light of new global regulatory developments. It also seeks to update participants on the work and developments in the Basel Committee of Banking Supervision and the IFSB in relation to liquidity risk issues at the global level.
Among the topics that will be discussed in the Seminar are:
Managing Liquidity and Liquidity Risks to Promote Financial Stability
Global Regulatory Developments on Liquidity Risk Management
Global Developments on Liquidity Risk and Challenges for Islamic Finance
Key Elements for Structuring Liquidity Instruments by the Public Sector
Liquidity Risk Measurement, Monitoring and Supervision: Liquidity Stress Testing
Panel Discussion: Emerging Trends and Challenges in Supervising Liquidity Risk Management in the Banking Industry