The World Bank announced the move October 14, 2012 and says the agreement establishes the platform for international dialogue on Islamic finance as a potential tool for inclusive and sustainable growth.
Signed in Tokyo, Japan, the MoU set out a framework for collaboration between the two parties and lends 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 with the common objectives of fostering, encouraging, and studying the expansion of Islamic finance globally.
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.
World Bank Managing Director Dr. Mahmoud Mohieldin said “The MoU signed…will help us deepen our understanding of Islamic finance and build capacities to develop institutions and instruments to support sustainable inclusive growth and help societies to achieve their development goals with emphasis on poverty alleviation and shared prosperity.”
“We expect to do this by expanding our knowledge base as well as our ability to support our member countries’ efforts to build resilient institutions and develop instruments to achieve greater financial inclusion and sustainable development,” said President of the Islamic Development Bank Dr. Ahmad Mohamed Ali Al Madani.
The core tenent 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 $1 trillion in 2010 and estimated to have exceeded $1.2 trillion in 2011, up from about $5 billion in the late 1980s, according to the World Bank.
By Ekow Quandzie