Turkish gov’t commences prep work to launch Islamic banking coordination mechanism

ANKARA

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Deputy Prime Minister Mehmet Şimşek has said preparatory work to launch a coordination mechanism for Islamic banking in Turkey have started, and the related circular note has recently been sent to the Prime Ministry. 

Şimşek particularly stressed the rising popularity of interest-free Islamic banking, dubbed “participation banking” in Turkey, around the world since the 2008 financial crisis. 

“Britain performed its first sukuk export worth 200 million pounds in June 2014. TheCityUK group launched its ‘Secretary on Islamic Finance’ in 2011 to coordinate and support the development of Islamic finance. The Islamic Finance Task Force [IFTF] in the U.K. was established in 2013 with the aim of making the county an Islamic finance hub and to lure further investments in this field, so Britain aims to be a hub in Islamic finance,” he said. 

“Luxembourg has the largest Islamic finance investment funds among non-Muslim countries with its 5 billion euros of funds, following Saudi Arabia and Malaysia,” he added, as quoted by Anadolu Agency. 

Şimşek also stated that Russia’s Sberbank had earlier announced that it would launch Islamic finance services in its own country. 

“Turkey has had one of the highest potentials in developing alternative banking activities in addition to traditional banking. In order to be able to realize this potential, new additional initiatives need to be created in addition to existing ones,” he said. 

The development of Islamic financial instruments and the launch of the mechanism for coordination are one of the priorities of the 64th Government Program and the 10th Development Plan, he added. 

Şimşek noted that preparation has started in order to establish this coordination mechanism. 

“The related notice note has been sent to the Prime Ministry,” he added.