Introduction 21
1994 with the objective of enlarging the scope of trade transactions and the
fl ow of investments among member countries. The ICIEC’s main objectives
are to provide Shari’ah-compliant export credit insurance and reinsurance
to cover the non-payment of export receivables resulting from commer-
cial (buyer) and non-commercial (country) risks and to provide investment
insurance and reinsurance against country risk, emanating mainly from
foreign-exchange transfer restrictions, expropriation, war and civil disturbance,
and breach of contract by the host government. The Islamic Corporation
for the Development of the Private Sector (ICD) was established in 1999
to promote the development of the private sector in member countries. Its
objectives are to (i) identify opportunities in the private sector that could
function as engines of growth; (ii) provide a wide range of productive fi nan-
cial products and services; (iii) mobilize additional resources for the private
sector in member countries, and (iv) encourage the development of Islamic
fi nancial and capital markets.
In 2006, the IDB established the International Islamic Trade Finance
Corporation (ITFC) to promote trade among OIC countries by providing
Shari’ah-compliant trade fi nance, promoting trade among member coun-
tries, enhancing their export capabilities and increasing the developmental
impact of trade fi nancing in those countries. That same year, IDB members
also established a special “solidarity” fund for reducing poverty, eliminating
illiteracy, eradicating major communicable diseases and building the human
and productive capacities, particularly in the least-developed OIC countries.
This fund is organized as an endowment (waqf ) fund, with targeted capital
of US$10 billion.
The AAOIFI was established as a self-regulatory agency to tackle the
problem of Shari’ah compliance and gaps in applying conventional fi nancial
reporting standards to Islamic banks. Its membership consists of some 97
institutions spanning more than 24 countries and its Shari’ah Board is pav-
ing the way towards harmonizing Islamic banking practices throughout the
world.^19 A number of countries, including Bahrain and Sudan, either require
Islamic banks to comply with AAOIFI standards or, as in the case of Qatar
and Saudi Arabia, are specifying AAOIFI standards as guidelines.
The AAOIFI was successful in defi ning accounting and Shari’ah stan-
dards, which were adopted or recognized by several countries. However,
with the growth of the market, in 2000 the regulatory and supervisory
authorities established, with the help of the IMF, a dedicated regulatory
agency, the Islamic Financial Services Board (IFSB), to address systemic sta-
bility and various governance and regulatory issues relating to the Islamic
fi nancial services industry. The IFSB took on the challenge and started work-
ing in the areas of regulation, risk management and corporate governance,
which are discussed in more detail later.
Table 1.2 sets out the functions of many of the key organizations now
operating in the fi eld of international Islamic fi nance.
The General Council of Islamic Banks and Financial Institutions (GCIBFI)
focuses on the media and awareness, information and research, policies