National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
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Table ‎7.10: Shari’ah Governance Framework
No. Recommendations Existing Institutions Gaps Need to be filled Implemented
by
3.1 Legal/Regulatory
Requirement for
Shariah Governance
(SG)
 IFSB
 AAOIFI
 Role of national
Shariah board
 IFSB
 AAOIFI
3.3 Developing Shariah
parameters/
standards
 IsFA
 AAOIFI
 IIFM
 Standards for a range
of new financial
products
 IsFA
 AAOIFI
 IIFM
7.2.4. Liquidity Infrastructure
While IIFM has developed some templates of liquidity management instruments such as
Islamic repo, LMC and IILM have come up with specific instruments that Islamic financial
institutions can use for their liquidity needs. Note that while IILM has a global reach, LMC has
more regional scope. Given the huge demand for liquidity instruments relative to supply, there
is a need to develop and issue more Shariah complaint liquidity management products.
Furthermore, the introduction of Basel III liquidity requirements would require coming up
with Shariah compliant Hiqh Quality Liquid Assets (HQLA). In this regards, IIFM can come up
with templates and IILM can issue instruments that can satisfy the requirements of HQLA in
Islamic banks.
While IFSB has published a Technical Note on Islamic money markets, there are no specific
models that are suggested. IFSB and IIFM can play an important role in developing standards
and templates for Islamic money markets. Similarly, while IFSB has published a working paper
of Shariah complaint LOLR, no guidelines or standards on it exist. Thus, specific models and
clear guidelines for Islamic LOLR need to be developed.
There is also a need to develop sound deep secondary markets where international Islamic
financial securities and sukuk can be listed, traded and settled efficiently. This would require
building the necessary market infrastructures such as Electronic Trading Platforms and a Real-
time Electronic Transfer of Funds and Securities Systems (Karim 2015: 230).
Table ‎7.11: Liquidity Infrastructure
No. Recommendations Existing Institutions Gaps Need to be
filled
Implemented by
4.1 Shariah compliant
liquidity instruments
 IIFM
 LMC
 IILM
 Meeting the huge
demand
 Shariah compliant
HQLA
 IIFM
 LMC
 IILM
 Other regional
entities
4.2 Islamic money
market
 IFSB  Models of Islamic
money market
structures
 IFSB
 IIFM
4.3 Lender of the last
resort (domestic)
 IFSB  Models of Islamic
LOLR structures
 IFSB