This paper discusses a global overview of liquidity management in institutions offering Islamic financial services. It also investigates the challenges and issues which impact on an effective liquidity management process. The main challenge and issue with liquidity management is to make it a globally accepted process by having global standardisation. This would promote transparency as well as familiarity within the Islamic finance industry. Our findings show that there are still many gaps to be filled, especially in the area of Shari'ah-compliant liquidity management schemes, cross-border liquidity market and infrastructures, availability of adequate short-term financial instruments, robust standards of documentation, product, process and accounting, uniformity in tax, legal and regulatory frameworks, an integrated payment and settlement system, as well as integrated liquidity monitoring and supervision. It is well accepted that liquidity management is the life-blood of a business process. Therefore, it is crucial to have a globally accepted process in order to develop a high-quality liquidity management framework. As such, creating awareness through education, having the right perceptions about Islamic finance, and having sufficient cross-border liquidity will bring liquidity management to the next level.
