Islamic Finance: Meeting Global Aspirations

  • Islamic finance can contribute towards greater global financial stability, stronger
  • global growth

  • Broader availability of Islamic financial services foster social
  • inclusion and increased market penetration

  • Strengthening prudential regulation
  • and market development key challenges

    Once a very esoteric industry, the market for Islamic financial products is becoming

    more global. According to recent estimates, worldwide Islamic finance industry assets

    exceed $1.87 trillion—a quantum leap from merely $150 billion in the mid-1990s.

    In the lead up to the Islamic Finance: Meeting Global Aspirations conference

    taking place on November 11, 2015 in Kuwait City, His Excellency Dr. Mohammad Al-Hashel,

    Governor of the Central Bank of Kuwait (pictured), spoke with IMF Survey

    about the role that Islamic finance plays in today’s global financial system.

    IMF Survey : What is the purpose of the Islamic Finance Conference?

    Al-Hashel: Although still a comparatively small share of all global financial

    assets, the role and relevance of Islamic finance in the global financial system

    is gaining significance. The Islamic Finance Conference can provide a forum for

    a global dialogue to develop a vision for the sustained growth of the Islamic financial

    industry, and build a platform for continued work in order to further cultivate

    and exploit the core competencies of Islamic Finance that make sustainable growth

    possible.

    IMF Survey : What are the key issues and themes that will be discussed

    at the conference?

    Al-Hashel: The first theme concerns increasing financial inclusion

    through access to finance, which is vital in stimulating the economy and improving

    the welfare of the underprivileged. Research suggests that over one third of the

    world's adult population—about 2.5 billion people—lacks access to formal

    financial services. Islamic finance can help remedy this situation by promoting

    Islamic microfinance, financing to small and medium-sized enterprises, and microTakāful

    (pooled insurance where shareholders contribute money to protect against loss

    or damage). Nevertheless, financial inclusion also requires enhancing access to

    basic banking services, creating a conducive regulatory environment, and promoting

    public awareness on financial matters.

    Second, we will discuss how to strengthen regulation and supervision to foster

    financial stability. A recent IMF study noted that Islamic standard setters,

    including the Islamic Financial Services Board, have established "rules of the road,"

    but these are not being applied consistently, potentially stifling the development

    of Islamic finance and creating systemic vulnerabilities. Continued efforts are

    needed to refine regulatory frameworks for Islamic finance institutions—in

    line with recent recommendations of both the Basel Committee on Banking Supervision

    and the Islamic Financial Services Board—while ensuring greater consistency

    in their...

    To continue reading

    Request your trial

    VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT