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New sharia-finance 'supra entity' formed

Monday 1 November 2010 - by Will Henley

The central banks of eleven countries have joined forces with two Islamic multilateral organisations to establish an international authority designed to boost investment flows between sharia-based financial services.

The new International Islamic Liquidity Management Corporation will be tasked with issuing instruments compliant with sharia law across borders and within national jurisdictions.

Professor Rifaat Ahmed Abdel Karim, Secretary-General of the Islamic Financial Services Board, one of the architects of the agreement, said that the "supranational entity" would increase investment flows between Islamic institutions.

"The IFSB is honoured to have facilitated the establishment of the IILM," said the professor at the signing ceremony in Kuala Lumpur, Malaysia, last week.

"It is our hope that the establishment of this new entity in the Islamic financial services industry will support the ever going efforts by the central banks and the monetary authorities to enhance the efficiency of institutions offering Islamic financial services in managing their liquidity."

The IILM, which is backed by the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector, will be based in Malaysia.

Signatories include the central banks or monetary agencies of Indonesia, Iran, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Saudi Arabia, Sudan, Turkey and the United Arab Emirates.

The agreement was witnessed by Malaysian Prime Minister, Dato Sri Mohd Najib Tun Haji Abdul Razak; Crown Prince of Perak Darul Ridzuan; and Financial Ambassador to the Malaysia International Islamic Financial Centre, Raja Dr Nazrin Shah Ibni Sultan Azlan Muhibbudin Shah.

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