Regulatory Alerts2008-12-02
Rules and Regulations Concerning the Liquidity System
The Central Bank of Kuwait issued Instructions No. 2/IBS/149/2003 to establish a comprehensive liquidity framework for Islamic banks based on the Maturity Ladder Approach. The regulations mandate that institutions categorize assets and liabilities into defined time bands, maintain maximum cumulative mismatch limits ranging from 10 to 40 percent, and develop board-approved internal policies to manage cash flows and contingency risks. Furthermore, banks are required to measure liquidity daily, submit standardized reporting forms weekly and monthly, and provide quarterly externally audited statements to ensure continuous compliance and financial stability.
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