Islamic finance, as a growing part of the international financial system, has the inherent ability to deal with the global financial crisis, says Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.
This was provided that “we build on its inherent strengths and supporting structures to ensure that it contributes to the overall stability of the international financial system,” she said.
According to Zeti, the key to shaping the robust growth of Islamic finance is to ensure the essential features of Islamic finance are preserved to retain its inherent resilience and stability.
She said Islamic finance was well-supported by two main features, which served as pillars to Islamic financial transactions.
“First, Islamic finance encourages business and trade activities that generate legitimate profits subjected to an explicit requirement of materiality and transaction validity.
“This is to ensure funds are channelled into real financial business activities, reinforcing a close link between financial and productive flows,” she said.
She said this reduced the Islamic financial system from over-exposure to risks associated with excessive leveraging and imprudent risk-taking. |
