On 7 May 2019, the Islamic Financial Services Board (IFSB) published for consultation a draft of Guidance Note 7 (GN7) on Sharīʻah-compliant lender-of-last-resort (SLOLR) facilities.
GN7 is primarily intended to serve as a benchmark for Central Banks (CBs) in establishing and operationalising an SLOLR framework that applies to full-fledged Islamic commercial banks and Islamic commercial banks that are subsidiaries of conventional banks. The application of GN7 can be extended to other deposit-taking institutions that offer Islamic financial services, subject to the relevant CB’s discretion.
GN7 complements and should be read in line with other IFSB technical and research publications on liquidity management and SLOLR. CBs are expected to start implementation of GN7 from 1 January 2021, taking into account the time needed to prepare: the necessary market infrastructure; to run appropriate assessments on eligible collateral, haircuts and Sharī`ah-compliant structures; and to make the necessary disclosures to institutions offering Islamic financial services in their jurisdictions.