Tokyo, Japan (BBN)- The World Bank (WB) and Islamic Development Bank (IDB) on Sunday signed a Memorandum of Understanding (MoU) to set out a framework for collaboration between the two parties and lend support to global, regional and country efforts in the development of Islamic Finance.
President of the Islamic Development Bank Group Dr Ahmad Mohamed Ali and World Bank Managing Director Dr Mahmoud Mohieldin signed the memorandum on behalf of their institutions in Tokyo with the common objectives of fostering, encouraging, and studying the expansion of Islamic finance globally, an announcement said.
The MoU adopts the following principals – knowledge sharing to identify and disseminate sound practices in the Islamic financial services industry, cross fertilization of ideas that would foster the development of Islamic finance that is critical for growth, efficiency and financial inclusion, encourage research and promote awareness of appropriate risk management framework for Islamic financial institutions in particular and the Islamic finance industry in general; and capacity building in the Islamic financial services industry with a view to fostering financial stability and promoting increased access to Islamic financial services in markets around the world.
The core tenant of Islamic Finance is a system which promotes risk-sharing and the avoidance of interest and leverage.
Global Islamic Financial assets have increased significantly over the past three decades, crossing US$1 trillion in 2010 and estimated to have exceeded $1.2 trillion in 2011, up from about $5.0 billion in the late 1980s.
Islamic finance could account for a substantial share of financial services in many countries in the coming years. Through the MoU, the World Bank and Islamic Development Bank will explore Islamic Finance as a potential tool supporting the efforts of countries to reach their development goals.
BBN/SSR/AD-14Oct12-1:03 pm (BST)
