National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
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4.2.4. Liquidity Infrastructure
According to law No. 88 of 2003, Islamic banks are required to maintain minimum liquidity
ratios and sufficient cash to deposit ratios similar to conventional banks (Wilson 2011). Article
56 of Law 88 of 2003 defines one of the roles of the Central Bank of Egypt (CBE) to determine
liquidity and reserve ratios for banks. Article 509 further elaborates on regulatory powers in
term of liquidity. If any bank fails to fulfill the liquidity ratio, the CBE is required to cover the
deficit and charge interest for the period the deficit occurs. Note that the law does not
distinguish between the conventional and Islamic banks.
4.2.5. Information Infrastructure and Transparency
Accounting and Auditing Framework/Transparency and Disclosure
The Ministry of Investment has the authority to issue Egyptian Accounting Standards (EAS) by
taking advice from the Egyptian Society of Accounting & Auditors (ESAA) (IFRS 2013).
Whereas companies in Egypt are required to follow the EAS that largely conform to IFRS, a
Permanent Committee in the Central Bank of Egypt (CBE) is responsible for developing and
implementing accounting and financial reporting requirements for the banking sector that are
based on IAS/IFRS (World Bank 2009). Accordingly, the CBE issued new guidance on financial
reporting in 2008 for the banking sector. There are no specific accounting standards for
Islamic banks and CBE requires both conventional and Islamic banks to disclose and publish
data according to their specific standards. These rules obligate all banks to be transparent and
clear about their operations.
Rating Agencies
The Middle East Rating & Investors Service (MERIS) was established in Egypt in 2003 as a joint
venture of Moody’s Investors Services and FinBi (Finance and Banking Consultants
International) (MERIS 2015). MERIS is considered a platform for providing credit rating
analysis and research not just in Egypt but also in other countries in the Middle East. MERIS
provides ratings of corporations, financial institutions and structured finance products. Rating
is mandatory for issuing bonds in Egypt. While there are no specific ratings structures for
sukuk, MERIS provides ratings of asset-backed securities arising from conventional
transactions under its structured finance products (MERIS 2015).
4.2.6. Consumer Protection Architecture
Consumer Protection and Financial Literacy
Law No. 67 of 2006, the Consumer Protection Law forms the basis for protecting consumers of
all goods and services in the country. Article 12 of the law stipulates the creation of a
Consumer Protection Agency as an independent public legal entity that will be responsible for
ensuring the protection of consumers’ rights. Article 17 authorizes the Agency to establish a
Dispute Settlement Committee that will settle disputes arising between consumers and
suppliers.
For consumer grievances in the banking sector, the Complaints Department at the Central
Bank of Egypt receives complaints against banks that can be communicated by different means