Continuation
In addition, particular transactions in Islamic banks need to
be considered in relation to risk exposure, given their unique characteristics.
For example, institutions following the AAOIFI standards on accounting
will be engaged in transactions such as operational leases.
AAOIFI is the Accounting and Auditing Organisation for
Islamic Financial Institutions.
In cases such as these, tangible assets will have to appear
in the balance sheets of Islamic banks.
It will appear as non-current assets together with depreciation
and amortisation costs.
Thereby it results in direct exposure to inflationary risk.
Such accounting requires sufficient risk management to ensure
that the risk of inflation is:
-
anticipated
-
and reported
accordingly.
From the research paper of
European Central Bank
(Authors: F.Mauro, P.Caristi, S.Couderc, A.D.Maria, L.Ho,
B.K.Grewal, S.Masciantonio, S. Ongena and S.Zaher)
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