Malayasia and UAE tie up to boost economic ties, Islamic finance

Reuters

KUALA LUMPUR, Oct 11 (Reuters) - The central banks ofMalaysia and the United Arab Emirates signed a pact on Friday tofoster closer economic ties between the two countries, includingin the area of Islamic finance.

The pact signals stronger cooperation between the twofinancial hubs, which held a combined $181 billion insharia-compliant banking assets as of 2011, despite growingcompetition for a share of Islamic business.

Governors of both central banks signed the memorandum ofunderstanding on the sidelines of the International MonetaryFund and World Bank annual meetings in Washington.

It follows stronger cooperation between the Islamic financecentres, in particular the Gulf and Southeast Asian regions,despite traditional differences in the design and implementationof sharia-compliant financial products.

Both central banks are key backers of the Malaysia-basedInternational Islamic Liquidity Management Corp, an institutiontasked with addressing a shortage of interbank lending productsfor Islamic banks.

Last year, Malaysia's securities commission revised itsguidelines for screening equities that qualify for Islamicinvestment, moving them closer to the approach used in the Gulf.

The global Islamic banking industry is expected to tip $1.3trillion by year-end. It follows religious principles such as aban on interest and pure monetary speculation. (Reporting by Bernardo Vizcaino and Al-Zaquan Amer Hamzah;Editing by Clarence Fernandez)

View Comments (0)