Current Issue on Islamic Banking and Finance
New paradigm of product packaging. Islamic banking and finance has emerged as a financial intermediation process that is competitive and resilient and that contributes to the overall wealth creation, growth and development of our nation.In the middle of an increasingly challenging and competitive financial environment, the evolution of a comprehensive Islamic financial system seeks to meet the range of requirements of a rapidly changing economic environment, with its soundness and stability secured through the robustness of its regulatory framework supported by the strength of its financial infrastructure and the sophistication of its products and services.Indeed, the strength of the respective components of the system and the interconnections of its markets will open new frontiers in Islamic banking and finance and will maximize the potential and opportunities that it accords.
In the new current issues on Islamic banking and finance have increased their product in sophistication from the deposits product to hybrid product that are able to enhance returns to depositors.
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Further advancement was made with the introduction of the Islamic variable rate financing mechanism that provides an alternative to the fixed rate financing. This will assist the Islamic banking institutions in mitigating part of the risk emanating from asset and liability mismatches. New innovative Islamic financial instruments such as Islamic asset-backed securities have also emerged and the financial structures underlying Islamic securities become more specifies.The rapid growth of Islamic unit trusts comprising a variety of bond funds, equity funds and balanced funds increases the efficiency and potential of the Islamic financial system as an intermediation channel by providing investors’ access to professional asset management that is based on their distinct risk tolerance levels. The issuance of new Islamic banking licenses to qualified foreign financial institutions will allow for the presence of foreign Islamic banking players to act as bridge between Malaysia and other global Islamic financial markets and increase the potential to tap new markets and growth opportunities.