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Desert fortunes

Thursday 10 June 2010 - by Georgie Rawkins


Other potential problems with sukuks include an agency problem between intermediaries, the allocation of assets to capital-intensive building projects instead of productivity-related endeavours and the endemic opacity of risks inherent in the system.

Despite this, there is a place for Islamic finance in the future and the significant efforts being made to strengthen the Islamic finance infrastructure demonstrate the willingness of the industry to achieve this.

Central Bank of Bahrain’s Abdul Rahman Al Baker said: “It is important to adopt proper corporate governance in the Islamic investment industry in order to improve the confidence of the investors and to ensure that markets are fair, efficient and transparent.”

In 2009, a Task Force on Islamic Finance and Global Financial Stability was formed to identify the additional building blocks that are necessary to further strengthen the foundations of the Islamic financial system and bring it into line with the wider financial systems.


In her keynote address at the Sixth World Islamic Economic Forum on 20 May, Central Bank of Malaysia governor Zeti Akhtar Aziz said: “Islamic finance draws its strengths from its direct link to economic activity and its inherent requirement for prudent risk management and explicit disclosure and transparency, thereby ensuring the viability of the activities in generating sufficient wealth to compensate for the risks involved. These inherent strengths will continue to be the catalysts driving its transition into a new era of growth and development in this post-crisis world.”


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