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Jakarta Post

Sharia banks may get hedge funding tool next year

  • The Jakarta Post

Jakarta   /   Tue, December 14 2010   /  11:33 am

Member countries of the International Islamic Financial Market (IIFM) may soon enjoy a hedging facility to reduce risks of financial transactions, officials say.

The IIFM’s Board of Directors agreed on Monday to implement a hedging facility for the sharia banking industry in the first half of next year amid global currency concerns.

Bank Indonesia’s director for sharia banking, Mulya Siregar, said that IIFM member countries would sign a master agreement, called a tahawwut agreement, to accommodate the hedging facility.

“The tahawwut agreement to be signed by IIFM member countries will minimize time and costs and make transactions faster,” he told reporters at 23rd IIFM Board of Directors Meeting at the central bank’s offices in Jakarta.

The agreement, according to Mulya, was needed to ease the risks of currency-related transactions amid currency conc...