This research is a study on the international framework for Islamic finance (“the framework”). The roles of dedicated and non-dedicated institutions in Islamic finance are examined and analysed in terms of their structures, functions, and the law-making dynamics in the international setting, and accordingly, their regulatory promulgation towards the adoption at the domestic national context. The framework is cognisant of the contemporary challenges arising from various emerging issues of creative disruptions posed to the existing design and operation of the global financial system. Influenced and modelled by the current global financial architecture, the framework has developed international institutions that issue and promulgate international standards, guidelines, principles, and soft-law instruments, tackling key important areas such as capital adequacy, liquidity, risk management, Sharī`ah-compliant ratings, and Sharī`ah governance mechanism, as adopted in various jurisdictions. Trust and confidence are the key determinants for the well-functioning system of the international framework for Islamic finance. As banking crisis and global economic recessions are the recurring phenomenon, the global financial safety-net must be safeguarded, and this includes Sharī`ah-lender of last resort, depositor’s protection, and ring-fencing mechanism, etc. Malaysia as an exploratory case-study is a heavily-regulated model for operating a framework of supervising and regulating dual-banking and financial systems, whilst the centrality of the Sharī`ah Governance mechanism through the supervision of the Sharī`ah Advisory Council of Bank Negara Malaysia (BNM) posits legal certainty, predictability, and stability of Sharī`ah rulings. The recent promulgation of the Financial Services Act 2013 [Act 758], and the Islamic Financial Services Act 2013 [Act 759] has reinforced the BNM’s position as a strong regulator for banking and financial sector in Malaysia. Last but not least, the Quranic worldview and ‘meta-dependence’ analysis of trust and confidence contribute towards novel scholarly contributions for the study of the international framework for Islamic finance.
