Central Bank of the UAE signs agreement with DIEDC to explore Islamic finance opportunities

The $2.4 trillion Sharia-compliant finance industry grew an annual 11.4 per cent in 2019. Ryan Carter / The National

The UAE’s Central Bank signed an agreement with the Dubai Islamic Economy Development Centre to expand the reach of the sharia-compliant banking sector and promote areas of mutual interest.

The two entities will work together to “publish joint research and exchange knowledge to enhance expertise”, they said in a statement.

They will also host international seminars, conferences and meetings, develop awareness projects, build technical capabilities as well as co-operate in fields supporting Islamic finance, the statement said.

The agreement reflected a shared commitment to " strengthen strategic ties with various entities in the banking and financial sector, and unify efforts to ensure that plans and initiatives are aligned with the future directions of the country and to achieve the common goals,” Central Bank of the UAE's deputy governor Said Al Shamsi said.

The MoU will look to “accelerate growth opportunities” in the Islamic banking and financial sector while attracting and preparing competencies.

The $2.4 trillion Sharia-compliant finance industry grew an annual 11.4 per cent in 2019, according to the Global Islamic Finance Report.

"We have made considerable headway in developing a global charter in collaboration with our strategic partners that serves to expand the scope and uptake of the Islamic finance sector and the wider Islamic economy," DIEDC's chief executive Abdulla Al Awar said.

"The charter is a first step in building a robust and globally unified legislative framework for Islamic finance transactions that will undoubtedly further expand the reach of the Islamic economy."

Earlier this year, Mr Al Awar outlined the phases for the development of a unified legal framework for Islamic finance.

Upon completion, the project would bring “much anticipated standardisation to the Islamic finance sector, reduce discrepancies in practices across the globe, and eventually translate into positive outcomes for the Islamic economy as a whole”, Dubai Media Office said at that time.

The DIEDC is working with the Islamic Development Bank on standardisation and signed an agreement in May. The DIEDC had previously inked a deal with the Accounting and Auditing Organisation for Islamic Financial Institutions for the use of its standards as a reference point in building the international legal framework.

Dubai, the Middle East’s commercial hub, hopes to drive economic activity through Sharia-compliant segments to boost its GDP and position the emirate as a significant player in the fast-growing global Islamic economy.