The IMF will include Islamic finance in its monitoring of financial sectors around the world
- IMF Managing Director Christine Lagarde said on Wednesday, in a sign of the industry’s growing economic weight.
- “We are keen to pursue this agenda and to further strengthen our policy advice
- by incorporating best practices for Islamic banking & finance into our surveillance work,”
- Lagarde told a conference on Islamic finance in Kuwait.
- The IMF has traditionally focused on conventional banking. But
- last year it launched discussions with an external advisory group of Islamic finance experts and industry bodies &
- this month it published a report on the impact of monetary policies on Islamic banking in Gulf countries.
Islamic finance, which bans interest payments and pure monetary speculation has:
- been growing faster than conventional finance &
- is estimated to have over $2 trillion of assets globally.
- It has become important for financial systems in more than 10 countries,
- accounting for over 15% of total financial assets there,
- Lagarde said.
- Non-Muslim countries such as Britain and Luxembourg have begun to issue Islamic bonds.
Lagarde called on governments in the Gulf & southeast Asia
- to increase their issues of Islamic bonds in various maturities &
- to incorporate them into their debt management strategies,
- in order to provide better pricing benchmarks for a much wider range of issuers.
- The IMF wants to encourage more consistency among countries in applying Islamic finance rules,
- fearing that conflicts among jurisdictions could stifle growth and create instability.
- Lagarde said that to maintain a level playing field with conventional banks,
- Islamic lenders needed to adapt their capital requirements
- to account for their profit-and-loss- sharing models.
- Countries with Islamic finance industries should harmonise tax treatment across jurisdictions &
- incorporate Islamic finance into international tax treaties,
- she told the conference, which was organised by institutions including the IMF and Kuwait’s central bank.