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Friday, 17 October 2008

Islamic Finance - The ’Sound Money’ Alternative

As the financial slowdown continues and recession begins to bite, Islamic finance practitioners from the Middle East, Asia, Europe and North America are gathering in Istanbul, Turkey, today (13 October 2008) to assess the ability of the industry to ride out the global economic storm.

Islamic finance has been growing around the world and is now valued at $1 trillion by the Asian Development Bank. As well as avoiding interest, Islamic finance requires financial transactions have underlying productive rather than purely speculative activity. Islamic banks are also required to share profits and losses arising from projects.
"The conventional finance sector is being forced to return back-to-basics approaches in their future activities and Islamic finance could well act as a role model," said Swati Taneja, conference director of the International Islamic Finance Forum taking place at the Çirağan Palace Kempinski Hotel until 17 October 2008.

"The true earnings, better discipline and careful balance sheet management attributes of Islamic finance are coming to the fore as the world adjusts to a new era in which sound money rather than speculative finance is an overriding priority."

The Istanbul forum also provides the first major opportunity for experts from around the world to take the pulse of the Islamic finance industry and assess the extent to which economic turmoil has rubbed off on Islamic sector. Preliminary assessment suggests the industry is faring well.

"The Islamic industry has by no means been immune with slower overall growth and increased uncertainty affecting both pricing and activity in the market," said Taneja. "Nevertheless, it has avoided the toxic elements of the crisis afflicting the more opaque financing structures of the conventional sector."

Sukuk (Islamic bonds) structures and capital markets will come under examination at the Istanbul forum as well as emerging Takaful development; Islamic jurisprudence; alternative asset classes including private equity and real estate; and sustainability with the greening of Islamic finance.

A special session on Turkey at the crossroads will also examine the status of Turkey's attempts to become a member of the European Union. The results of a study on the impact of politics on the underdevelopment of Islamic finance in Turkey are to be presented.
(Middle East)
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