March 28 South Korea's central bank has joined
the Islamic Financial Services Board (IFSB), one of the main
standard-setting bodies for Islamic finance, as regulators
across Asia build closer ties to the growing industry.
Guidelines issued by the Kuala Lumpur-based IFSB are gaining
prominence as the industry takes a greater share of the banking
sector in several majority-Muslim countries and expands into new
The Bank of Korea is the 59th regulatory body to join the
IFSB, bringing total membership to 184, joining the likes of the
central banks of Luxembourg and Japan and the monetary
authorities of Hong Kong and Singapore.
The move could augur stronger links between South Korea and
Islamic finance hubs in southeast Asia.
South Korea's Export-Import Bank of Korea already
has a bond programme in Malaysia that can issue Islamic bonds,
or sukuk, although it has yet to tap the market.
This week, Hong Kong lawmakers passed a bill that will allow
the AAA-rated government to raise around $500 million via sukuk,
or Islamic bonds.
In a separate statement, the IFSB also adopted a revised
guideline on the supervision of Islamic finance institutions,
helping tighten regulatory oversight of industry practices.
The latest update complements stricter Basel rules, agreed
globally to make banks safer after the 2007-09 credit crisis.
In the past two years, the IFSB has issued separate
guidelines on liquidity risk management, stress testing and
($1 = 3.2915 Malaysian ringgit)
(Reporting by Bernardo Vizcaino; Editing by Sunil Nair)