Bangko Sentral ng Pilipinas Outlines Liquidity Risk Management Guidelines for Philippine Islamic Financial Institutions

The Bangko Sentral ng Pilipinas (BSP) has issued draft guidelines pertaining to liquidity risk management of Islamic banks and Islamic banking units (IBUs). The main feature is that the BSP expects Shariah-compliant banks and IBUs that are a part of conventional banking systems to have their assets and liabilities segregated from the conventional parent, in addition to having separate liquidity management strategies. The BSP prefers that Islamic banks and IBUs apply Shariah-compliant instruments in the application of liquidity risk management, rather than assuming them to be the same as those of conventional banks.

Consultation with their respective Shariah Advisory Council (SAC) should be a practice amongst the Islamic ba...