Efforts continued to be taken to strengthen Malaysia’s position as an International Islamic Financial Centre and contribute towards the internationalisation of Islamic finance by developing shariah-compliant products and services as well as tools to facilitate and support cross-border transactions. This included the establishment of the International Islamic
Liquidity Management Corporation (IILM), which began operations on 1 February 2011 in Kuala Lumpur. The IILM is a collaboration of 12 central banks and regulatory agencies as well as two multilateral institutions. IILM is tasked to issue short-term shariah-compliant multi-currency liquidity instruments to facilitate cross-border liquidity management between financial centres, which will in turn enhance Islamic financial interlinkages. This would also contribute to more efficient management of financial flows across borders.
On 1 July 2011, the Syariah Governance Framework was implemented to further strengthen the oversight role, authority, accountability, independence and competency of the Board of Directors, the Syariah Committee and the Management of Islamic financial institutions on syariah matters. The Framework is to ensure greater shariah observance through end-to-end shariah control mechanisms. Implementation of the Framework will foster greater stakeholders’ confidence and enhance integrity of the Islamic financial industry, thereby reducing shariah non-compliance risk and contribute towards maintaining institutional soundness and financial stability.
(Source: Economic Report 2011/ 2012)