Regulatory Alerts2024-02-20
Added · Updated
Central Bank of Jordan Memorandum No. 3/2024: Liquidity Provision Tools for Islamic Banks
The Central Bank of Jordan (CBJ) issued Memorandum No. 3/2024 to provide Islamic banks with new liquidity facilities, including daytime liquidity via interest-free loans (Qard Hasan) against pledged sukuk and overnight or up-to-one-week liquidity through Unrestricted Master Investment Wakalah agreements. The directive mandates specific operational procedures for these tools, including the use of the TMON system within DEPO-X, and establishes accounting treatments for pledged assets and liabilities on the balance sheet. It further defines the regulatory impact on liquidity ratios, specifying that pledged sukuk are excluded from the Liquidity Coverage Ratio (LCR) numerator and assigning specific weighting factors for legal liquidity ratio calculations.