Turkey to focus on participation finance

ISTANBUL

Turkey will take decisive steps in alternative finance in days to come to assume its rightful place and raise the share of participation finance in total banking assets to 15 percent as of 2025, President Recep Tayyip Erdoğan said on Sept. 9.

“In the coming period, we will take more bold and decisive steps in alternative finance and we will bring our country to the place it deserves in this field,” Erdoğan said, speaking at the program “New Horizons in Alternative Finance” held at Marmara University.

“Our target is to raise the share of [Islamic] participation finance in total banking assets from its current level of 5 percent to 15 percent as of 2025,” he said, underlining that he wanted to see everyone’s support in order to reach this goal.

But the interest rates of the banking system should not be applied to participation finance, he noted.

The alternative financial transactions were spreading rapidly around the world, the president said, noting that he believed the current interest-based system would leave its place to a new financial architecture in the future, he stated.

The president affirmed that the share of gold-based lease certificates issued by the Treasury and Finance Ministry, which offers interest-free investment, is 60 percent of the total, indicating that there is a strong demand potential for interest-free finance products.

The reason for opposing the interest-based system is that the human burden of the system is heavier, Erdoğan added.

Erdoğan also acknowledged that Turkey needed a strong economy and a sound financial system.

“Today, we see that the financial system, whose main function in the economy is to bridge the savings and real investments, cannot fulfill its duties with its current structure.”

“I regret that our non-public banking system did not provide sufficient support to the real sector during this period. It is clear that this structure, where all sectors feed the financial sector, is unsustainable. The collapse of this economic system is inevitable,” Erdoğan stated.

“The 2008 crisis revealed that the current system is unsustainable. And today, the world is surrounded by a new fear of economic recession,” he said.

Istanbul Finance Center to be completed in 2022

The Istanbul Finance Center project is expected to be completed as of early 2022, Erdoğan also said.

“I hope we will achieve the same thing in finance as we have a say in the political field at the regional and global level. Our goal of making Istanbul a global financial center is very important for this. We’re too late. We are in pursuit of being one of the important centers in the world with the Istanbul Finance Center,” he said.