The World Bank and Islamic Development Bank signed a Memorandum of Understanding (MoU) to set out a framework for collaboration between the two parties and lend support to global, regional and country efforts in the development of Islamic Finance.
President of the Islamic Development Bank Group Dr. Ahmad Mohamed Ali and World Bank Managing Director Dr. Mahmoud Mohieldin signed the memorandum on behalf of their institutions with the common objectives of fostering, encouraging, and studying the expansion of Islamic finance globally.
“The signing of the MoU between the World Bank and IDB aims to forge a strategic partnership between our two institutions in the area of Islamic finance to support inclusive growth, including greater access to finance for the poor, and financial stability in our mutual member countries. We expect to do this by expanding our knowledge base as well as our ability to support our member countries’ efforts to build resilient institutions and develop instruments to achieve greater financial inclusion and sustainable development,” said President of the Islamic Development Bank Dr. Ahmad Mohamed Ali Al Madani.
The core tenant of Islamic Finance is a system which promotes risk-sharing and the avoidance of interest and leverage. Global Islamic Financial assets have increased significantly over the past three decades, crossing US$1 trillion in 2010 and estimated to have exceeded US$1.2 trillion in 2011, up from about US$5 billion in the late 1980s. Islamic finance could account for a substantial share of financial services in many countries in the coming years. Through the MoU, the World Bank and Islamic Development Bank will explore Islamic Finance as a potential tool supporting the efforts of countries to reach their development goals.