President Recep Tayyip Erdoğan on Friday highlighted the Muslim world’s underperformance and untapped financial potential, urging for higher intra-Islamic cooperation in commerce, finance and funding.
Addressing delegates on the 2nd Global Islamic Economy Summit in Istanbul, Erdoğan emphasised the disparity between the Muslim world’s demographic weight and its financial clout.
“Muslims account for 25% of the world’s population, yet Islamic finance assets total only about $2.5 trillion,” he advised the occasion organized by the AlBaraka Forum for Islamic Economy on the Istanbul Financial Center (IFC).
“The Organisation of Islamic Cooperation (OIC), which is the largest international organization after the United Nations, consists of 57 member countries. However, their share in global trade is only around 11%,” Erdoğan stated.
“In terms of population, we represent 25% of the world, yet our contribution to the global economy is approximately 9%.”
These figures, in keeping with Erdoğan, replicate underperformance in comparison with the potential of the Islamic world. “As the Islamic world, we must maximize our trade, investment, financial cooperation and collaboration opportunities,” he added.
Erdoğan went on to reiterate his opposition to interest-based techniques, whereas saying Ankara was decided to press on with its present financial program till all of its objectives are achieved.
Under this system, launched in mid-2023, the Central Bank of the Republic of Türkiye (CBRT) had tightened its benchmark coverage to include inflation, which dipped to beneath 38% in April, from as excessive as 75% final May.
‘Longing ‘ for interest-free economic system
Erdoğan stated work should be achieved to vary and discover alternate options to what he known as an curiosity rates-based financial system, and added such a system can’t be seen as official.
“I have always opposed the distorted system that deepens inequalities, disrupts income justice, and turns billions of people into the slaves of a handful of capitalists. I oppose it again. I have often said that, no matter what, we cannot view as legitimate interest rates and an economic system based on interest rates,” Erdoğan stated.
“I will continue to voice my longing for an interest rate-free economy from now on too. We will not turn back from our battle for the economic order based on interest rates to change,” he added.
The president additionally vowed to proceed implementing the financial agenda drafted by his treasury and finance minister, Mehmet Şimşek, to be able to chart a path of disinflation.
“We are determined to implement our economic program, with which we have made noteworthy progress over the past two years, until it reaches its goals,” Erdoğan stated, and added that the tip objective was to attain single-digit inflation.
Current system ‘can’t be sustained’
The president went on to say it’s more and more evident that there’s a rising want for various paradigms throughout all sectors. In economics, significantly in finance, there’s a rising demand for a human-centered, truthful, compassionate and accountable strategy, he famous.
“One undeniable truth has become clear to everyone: the current global economic system, with its flawed structure that prioritizes consumption and profit maximization, continues to sideline human values, exacerbate inequalities and promote growth without productivity,” stated Erdoğan.
Instead of creating efficient options to help financial growth, he argued that the prevailing system conceals basic points with superficial measures.
“Many experts and thinkers who have correctly analyzed the current situation assert that the system, in its current form, cannot be sustained any longer.”
Erdoğan underscored Türkiye’s ambitions to place Istanbul as a worldwide Islamic finance hub, pointing to initiatives beneath the Istanbul Financial Center framework as proof of the nation’s dedication.
“The collaborations we have initiated under the Istanbul Financial Center serve as a concrete testament to our efforts to integrate into the global economy while preserving our Islamic values,” he stated.
The president harassed that Türkiye attaches nice significance to the event of participation finance centered in Istanbul.
“Its unique location, accumulated expertise and potential provide substantial advantages to both Istanbul and the Istanbul Financial Center. With the dedicated efforts of our institutions and authorities, I hope we can transform these advantages into lasting achievements,” he added.
Islamic finance regulation
Also addressing the summit, Şimşek stated Türkiye is actively engaged on a brand new Islamic finance regulation, aiming to move it by means of Parliament as a part of broader efforts to strengthen the nation’s participation-based monetary system.
Şimşek underlined the rising significance of Islamic finance in tackling international financial challenges. He famous the sector’s potential to supply a fairer, risk-sharing and asset-backed monetary mannequin, particularly in at present’s unsure international panorama.
“We are currently finalizing the Islamic finance law and preparing to introduce it to Parliament,” he stated. “We are carefully reviewing the draft to avoid including provisions that may cause implementation issues or hinder sectoral acceptance.”
Şimşek emphasised that Islamic finance, with its concentrate on sustainability, real-economy backing and inclusive entry, presents a reputable various for selling shared prosperity.
“The Islamic finance model stands out today because it emphasizes equitable participation, financial inclusion and sustainable growth,” he stated.
Şimşek identified that Islamic finance presently represents simply over 1% of worldwide monetary belongings however has witnessed speedy development in each market worth and presence.
However, he famous that a lot of this development stays geographically concentrated, and that challenges equivalent to regulatory gaps, expertise shortages and an absence of worldwide innovation funding persist.
“The key players in this field are not investing in this innovation on a global scale. At the same time, there is a lack of talent and significant gaps in the regulatory framework,” stated the minister.
“Important progress has been made in recent years, but we are still facing major structural challenges that need to be overcome. Only if we can clearly identify the factors causing us to lag behind will we be able to develop effective solutions,” he added.
Islamic finance in Türkiye
Türkiye presently has 9 participation banks, with Islamic finance holding an 8.3% share of the nationwide banking system.
Şimşek stated this determine stays far beneath its true potential.
“Participation finance in Türkiye has reached a significant share within the banking sector. The markets, particularly in terms of participation-based financing instruments, are showing development,” he stated.
“However, currently, participation banks account for only 8.3% of the Turkish banking system, which is far below its potential and clearly indicates the need for broader-scale growth.”
He harassed the federal government is mobilizing all its assets to make sure the wholesome development of the sector, citing Türkiye’s latest rating within the prime 10 of the Global Islamic Finance Development Index amongst 136 international locations.
He additionally emphasised that the Treasury continues to emphasise sukuk issuances each domestically and internationally.
Şimşek went on to emphasise that prosperity needs to be shared pretty, and stated they see Islamic finance as enjoying a vital position on this course of.
“Although it presently holds a comparatively small share within the international monetary system, summits and worldwide conferences on this area considerably speed up its growth,” he stated.
“The rapid growth of Islamic finance in recent years is remarkable. Previously almost invisible, it now represents approximately 1% of global financial assets. We should see this as a springboard,” he added.
“By recognizing existing issues at both local and global levels, taking the right steps, improving efficiency and fostering strong collaborations, we can increase this share to 2% or even 5% in a much shorter time frame.”
The Global Islamic Economy Summit focuses on empowering Islamic monetary and non-financial establishments to assist obtain their objectives of sustainable development and depart an influence on the worldwide economic system by way of new methods.
The occasion has been organized as a part of the “AlBaraka Summits” in collaboration with Türkiye’s Investment and Finance Office, the Istanbul Financial Center (IFC), Ibn Haldun University, the Islamic Cooperation Youth Forum (ICYF), and AlBaraka Group as a worldwide accomplice.
The summit is concentrated on rising operational effectivity, encouraging innovation, strengthening threat administration, selling monetary participation and supporting cooperation amongst trade stakeholders by creating a deeper understanding of Islamic rules.
High-level discussions on the combination of Islamic financial rules are anticipated on the summit.
“We look to create new roads, not just to walk on new roads. We are creating in Istanbul, Medina, London, Kuala Lumpur, Karachi, Cairo and many others,” Yousef Hassan Khalawi, the secretary-general of the AlBaraka Forum for Islamic Economy, stated on the opening ceremony.
As a part of the Islamic ecosystem, increasingly initiatives needs to be created, he added.
Human-centered various
Addressing the occasion, Bilal Erdoğan, chair of the board of trustees of Türkiye’s Ilim Yayma Foundation, stated Islamic economics isn’t just an interest-free monetary mannequin however an ethical, justice-based and human-centered lifestyle that provides an alternate paradigm for the world.
The widespread data hole surrounding Islamic finance stays a key concern stays, even in Türkiye, the place it accounts for round 8% of the monetary sector, stated Erdoğan.
Many folks, he famous, cut back Islamic finance to an interest-free device, failing to know its foundational values.
“It is not really only about an interest-free way of reaching finance. It is actually a potential alternative paradigm for humanity,” he stated. “It is actually a potential alternative paradigm for humanity.”
He additionally criticized Islamic monetary establishments in Türkiye for being overly cautious of their strategy and missing efficient communication methods.
“How do we frame our products? How do we try to make sure that people realize that there are these ways of doing similar things as well?” Erdoğan stated, urging a stronger concentrate on Islamic finance’s distinctive options, significantly its rules of partnership and participation.
He added that tens of millions of individuals around the globe stay outdoors the banking system not because of exclusion, however as a result of the system itself has “lost its humanity.” Islamic finance, he stated, ought to goal to combine these people by “uplifting them with the dignity that it offers.”
Addressing the humanitarian disaster in Palestine, he added: “I am hoping for once this genocide will come to an end.”
Source: www.dailysabah.com