Central Bank of Jordan’s governor details Sukuk plans and revised corporate governance legislations to the IMF (By IFN)

Central Bank of Jordan’s governor details Sukuk plans and revised corporate governance legislations to the IMF

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JORDAN: The Hashemite Kingdom of Jordan’s Minister of Finance, Suleiman Hafez, and its central bank governor, Ziad Fariz, signed a detailed Memorandum of Economic and Financial Policies which was presented to the International Monetary Fund yesterday. The letter of intent comprised of proposals for the financial sector, including the creation of a robust supervisory framework and details of its Sukuk plans following the issuance of its Sukuk legislation earlier in the year. The memorandum stated that the Central Bank of Jordan (CBJ) is in the process of updating its corporate governance code, which is set to be issued by next month. With regards to Islamic finance, it was mentioned that the recently passed Sukuk legislation is an “important step in developing Islamic finance instruments”. It added: “The legislation passed in September allows both government and private sector companies to issue Sukuk in domestic and international markets. The necessary regulations are now being prepared by the securities regulator.” The report also added that the CBJ has established a Financial Stability Department to enhance its capacity to assess and manage systemic risks, while focusing on risk analysis in the financial system and stress testing, with a view to publish a Financial Stability Report. The central bank is also in the midst of completing a quantitative impact study of the implementation of Basel III in its banking system, based on analysis submitted by Jordanian banks, which will be completed this year. The CBJ is also looking to develop a framework for Pillar 2 of Basel II which will allow for the assignment of individual capital ratios for banks. The central bank is also keen on addressing the issues brought forth in the Middle East and North Africa Financial Action Task Force 2009 report and will review current legislations to comply with the task force’s recommendations.