Islamic finance Infrastructure Tariqullah Khan Financial infrastructure comprises of the resources, support, protection, facilities and utilities that make the use of architecture beneficial for developing an inclusive, dynamic and resilient financial system ----- just like water, electrical, lighting, heating, communication, furniture etc., in a building that make the utilization of the building’s full capacity possible Financial infrastructure shall be seen as work in progress and must be subjected to continuous improvement ----- just like the water, electrical, lighting, heating, communication, furniture etc., in a building that need maintenance and improvement The 5 Pillars of financial infrastructure Pillar 1 Legal & regulatory infrastructure Pillar 2 Transparency & governance infrastructure Pillar 3 Pillar 4 Systemic liquidity infrastructure Human resources R&D infrastructure Pillar 5 Shariah governance infrastructure □banking & company laws, □contracts, □property rights, □insolvency and creditor rights regime, □financial safety nets, □regulatory & supervisory regimes Pillar 1 Legal & regulatory infrastructure Pillar 2 Transparency & governance infrastructure Pillar 3 Pillar 5 Systemic liquidity infrastructure Human resources R&D infrastructure Pillar 6 Shariah governance infrastructure □monetary & financial policy transparency and neutrality, □corporate governance, accounting and auditing framework, □disclosure regime & market monitoring arrangements such as credit ratings, and credit reporting systems Pillar 1 Legal & regulatory infrastructure Pillar 2 Transparency & governance infrastructure Pillar 3 Pillar 5 Systemic liquidity infrastructure Human resources R&D infrastructure Pillar 6 Shariah governance infrastructure □monetary and exchange operations, □payment and securities settlement systems, □ microstructure of the money, exchange and securities markets Pillar 1 Legal & regulatory infrastructure Pillar 2 Transparency & governance infrastructure Pillar 3 Pillar 5 Systemic liquidity infrastructure Human resources R&D infrastructure Pillar 6 Shariah governance infrastructure □literacy, educational, training, certification programs, □research, advisory services & product development, □Shariah governance competencies, □information services Pillar 1 Legal & regulatory infrastructure Pillar 2 Transparency & governance infrastructure Pillar 3 Pillar 4 Systemic liquidity infrastructure Human resources R&D infrastructure Pillar 5 Shariah governance infrastructure □Legal protection for Shariah supervision, □arbitration & reconciliation framework, □governance of Shariah supervision, □central Shariah advisory board, □licensing of Islamic financial Pillar 1 Legal & regulatory infrastructure Pillar 2 Transparency & governance infrastructure Pillar 3 Pillar 4 Systemic liquidity infrastructure Human resources R&D infrastructure Pillar 5 Shariah governance infrastructure Stakeholders Macro Level Meso Level Micro Level Users of services Authorities concerned with legal, regulatory and tax framework and policies Knowledge, educational, capacity building, information and advisory services and providers Financial services and the institutions and markets providing them Uses and users Individuals, families and households International and domestic traders Nonfinancial businesses Financial businesses Users of financial services Not-for-profit organizations Governments International organizations and government agencies Banks (deposit taking institutions) Fund managers Other nonbanking financial institutions Debt instrument issuers Micro level components of financial services & their development Equity issuers Insurance companies Investment & Strategy advisory services Micro & special finance services Payments and remittance services Best practice standard & standard setters Legal and advisory services Services of associations of service providers and users Education & literacy services Rating services Meso level components of financial sector development Physical and ITC infrastructure Markets and market micro structures Training and capacity building Data and information services Private debt markets Equity and share markets Money markets Quasi debt markets Markets and market micro structures Government debt markets Foreign exchange markets Legal framework Regulatory & supervisory framework Investors rights regimes Macro level components of FSD Corporate governance framework Lender of last resort framework Property rights Tax framework Macro economic policy framework Judiciary & arbitration