Thanks to the concentration of wealth in oil-rich economies and the development of harmonised regulatory standards, the Islamic finance market is more popular than ever. Islamic finance originally focused on the retail market, but now attracts mainstream investors. The industry boasts assets worth more than $2tn, and is expected to exceed $3tn by 2020.
This month’s Bulletin looks at this small but fast-growing and dynamic market, documenting its present state and development trajectory. Our contributors examine the links between Islamic finance and other investment trends such as green finance, through the development of green sukuk products, and the digitalisation of finance through Islamic fintech.
The UK is a hub for innovation in Islamic fintech, while Muslim-majority countries in Asia have been at the forefront of the development of Islamic finance products. Malaysia launched the world’s first green sukuk in 2017, and in February this year Indonesia issued the first sovereign green sukuk, with proceeds allocated to climate- or environment-related projects and designed to comply with Islamic law.
These developments reflect a growing focus on innovation and sustainability in investment practices. This was a key theme at this year’s International Monetary Fund-World Bank Group annual meetings in Bali, where OMFIF launched two new reports: on the development of capital markets in Africa, and on the application of blockchain technologies to central banks’ interbank payments systems. Adjusting investment shifts in the demographic and societal profiles of the global economy will drive the development of new specialist finance markets.
Key contributors to this edition of The Bulletin include:
- Christine Lagarde, managing director of the International Monetary Fund;
- Már Guðmundsson, governor of the Central Bank of Iceland;
- Abdul Haseeb Basit, co-founder and principal of Elipses;
- Kalin Anev Janse, secretary general of the European Stability Mechanism.