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International Monetary Fund. Monetary and Capital Markets Department
The implementation of a twin peaks model represents a significant change to the South African financial supervisory architecture. The Prudential Authority (PA), operating within the administration of the South African Reserve Bank (SARB), is responsible for promoting and enhancing the safety and soundness of financial institutions that provide financial products and securities services. A separate authority, the Financial Sector Conduct Authority2 (FSCA), is responsible for market conduct regulation and supervision. The introduction of the twin peaks architecture was motivated by a need to increase the robustness of the financial sector regulatory and supervisory system, reinforce financial stability, improve protection of customers, and enhance cooperation among the regulators.
Mr. In W Song and Carel Oosthuizen

D. Operational Risk E. Profit Rate Risk F. Equity Investment Risk G. Sharia Risk H. Liquidity Risk VI. Transparency, Disclosure and Market Discipline VII. Deposit Protection and Bank Resolution A. Deposit Protection B. Bank Distress C. Liquidation VIII. Conclusion References Figures 1. Islamic Banking Share in Total Assets by Jurisdiction (June 2013) 2. Legal Bases for the Practice of Islamic Banking 3. Explicit Recognition of Islamic Banking 4. Conduct of Islamic Banking by a Stand-Alone Islamic Bank 5. Practice of Islamic

International Monetary Fund. Monetary and Capital Markets Department

://www.imf.org/external/np/fsap/fssa.aspx , and www.worldbank.org/fsap . Contents Glossary EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS INTRODUCTION BANKING SECTOR STRUCTURE MAIN FINDINGS A. Powers, Independence and Governance B. Cooperation and Consolidated Supervision C. Supervisory Approach, Tools, and Techniques D. Corrective and Sanctioning Powers E. Banks’ Corporate Governance F. Credit Risk, Problem Assets, and Provisions G. Concentration Risk, Large Exposures, and Transactions with Related Parties H. Liquidity Risk BOXES 1. Regulatory Measures in Response to

Mr. In W Song and Carel Oosthuizen
The growing presence of Islamic banking needs to be accompanied by the development of effective regulation and supervision. This paper examines the results of the survey conducted by the International Monetary Fund to document international experiences and country practices related to legal and prudential frameworks governing Islamic banking activities. Although a number of countries have made considerable progress in creating legal, regulatory, and supervisory frameworks that accommodate Islamic banking, there are substantial differences. This paper also identifies a number of challenges faced by regulatory and supervisory agencies regarding Islamic banking.
Mr. In W Song and Carel Oosthuizen

authority often has a responsibility to ensure compliance with Shariah Law and, thus, provides supervisory staff with the necessary training. H. Liquidity Risk Liquidity risk management poses particular challenges to Islamic banks. It is a challenge for Islamic banks to maintain an appropriate level of liquid resources for liquidity management purposes and simultaneously optimize the return on such liquid resources by finding an appropriate investment for their surplus of liquid resources. Islamic banks are usually forced to maintain higher liquidity than

International Monetary Fund. Monetary and Capital Markets Department

of concern. H. Liquidity Risk 101. Banks in South Africa are currently subject to the LCR and the NSFR, on a solo and consolidated basis . In addition, two other liquidity ratios, the cash reserve requirement and the liquid asset requirement were maintained when the LCR and the NSFR were introduced. Regulation 26 and Directive 8/2017 provide detailed requirements on the calculation of the LCR and the NSFR. Banks report the LCR on a daily basis to the PA. The implementation of the LCR was assessed by the Basel Regulatory Consistency Assessment Program