Islamic finance helpful to financial stability: Malaysian official

09:00, November 11, 2010      

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Islamic finance can bring about growth and development, while contributing towards preserving financial stability, a Malaysian official said.

This was because the growth in Islamic financial assets was generally accompanied with growth of underlying activities that have economic value, Zeti Akhtar Aziz, governor of Bank Negara Malaysia, the country's central bank, said in Kuala Lumpur Wednesday.

Speaking at the World Congress of Accountants, Zeti said that Islamic finance has its own inherent inbuilt checks and balances that address the issues in financial stability.

Zeti also said that its value proposition of profit and risk sharing requires the appropriate due diligence, disclosure and transparency, and therefore, contracts entered into demanded high standards of disclosure and transparency.

"This reinforces market discipline and minimizes informational asymmetries," said Zeti.

According to Zeti, despite the turmoil and uncertainties in the global financial system, Islamic finance has demonstrated its resilience and its continued global expansion during this period.

"Expanding at an average annual rate of 20 percent, Islamic finance represents one of the fastest growing segments in the financial industry.

"The Islamic financial services industry is now approximated to be worth more than one trillion U.S. dollars," said Zeti.

Source: Xinhua


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