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As LIBOR is Phased Out, IIFM Introduces Islamic Options for Risk-Free Rate Benchmark

As LIBOR is Phased Out, IIFM Introduces Islamic Options for Risk-Free Rate Benchmark

October 06, 2021

http://islamicmarkets.com/articles/as-libor-is-phased-out-iifm-introduces-islamic-options-for
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By IM Insights

On the 4th of October 2021, the International Islamic Financial Market (IIFM) announced the approval of its Shariah Board’s Risk-Free Rate (RFR) implementation-related Compliant Standard Structuring Solutions for transactions involving Murabahah and Ijarah.

Why it Matters?

Globally, the London Inter-Bank Offered Rate (LIBOR) is being phased out and transitioning to RFRs or Alternative Benchmark Rates for currencies such as the USD, EUR, GBP, CHF, and JPY as well as certain other hard currencies used in domestic and cross-border trades is nearing completion, with the discontinuation date being the 31st of December 2021. This has consequences on Islamic financial transactions too; as such, the IIFM has introduced these solutions.