In the context of this growth at local and global levels; the banking sector is going through a paradigm shift; resulting in an intense competitive environment in a dual banking
(1) full-fledged Islamic banking system operating on a parallel basis with a full-fledged conventional system (dual banking
The CPIFR and the subsequent regulations for the observance of standards and codes in Islamic banking were essential "for both fully Islamic banking systems as well as systemically significant Islamic banking systems in dual banking
markets," says Bello Lawal Danbatta, secretary-general of Kuala Lumpur-based Islamic Financial Services Board (IFSB), which jointly developed the CPIFR with the IMF.
The directors noted that the CPIFR standard and assessment methodology will be used in fully Islamic banking systems and as a supplement to the Basel Core Principles for Effective Banking Supervision (BCP) in dual banking
systems where Islamic banking has a significant market share of 15 per cent or more.
The CPIFR and their associated methodology will be applied in financial sector assessments undertaken in fully Islamic banking systems and, as a supplement to the Basel Core Principles for Effective Banking Supervision (BCP), in dual banking
systems where Islamic banking is systemically significant.
A total 10 countries around the world benefit from a dual banking
system, the assets of which Islamic banks own 20 percent.
Michael Nonaka, a partner with Covington & Burling in Washington, D.C., said there is "great value" in a sandbox for entrepreneurs, but "in order for a sandbox to work, you have to get the buy in from all the different agencies." Even if that were possible to do, he said that with the dual banking
system, the problem would "exacerbate tenfold" if state regulators were added to the mix.
Cetin's presentation provided insight on the application of CDMs for analysis of efficiency and other aspects of financial stability in a country and for comparison between Islamic and conventional banks in countries that have dual banking
(2004) state that Malaysia has a truly dual banking
system with both conventional and Islamic banks operating side by side.
The Central Bank has called on Tunisian banks, branches of foreign banks, to operate the network of subsidiaries of these banks using the "dual banking
" mechanism, allowing the Tunisian community to benefit from preferential treatment when carrying out exchange transactions.
Though Sudan is one of the only completely Shari'ah-compliant banking systems in the word, a growing number of African countries have dual banking
systems with distinct regulatory frameworks for Islamic banking.