SYNDEY (Reuters) - The World Bank and the Jeddah-based Islamic Development Bank ISDBA.UL (IDB) have signed a three-year agreement to share expertise in Islamic finance and study how it can help economies develop.
The IDB, with 56 member countries, provides financing, loans and technical assistance for development schemes which follow Islamic principles, such as a ban on interest payments and pure monetary speculation.
Under the agreement, signed this week, the two bodies will cooperate to study issues such as financial stability and best practices in the industry, Karim Allaoui, senior officer at the IDB, told Reuters by telephone.
“People are looking for a more ethical aspect of finance, but Islamic finance is fairly new - its size is comparatively small and there hasn’t been much research or documented work that we would otherwise encounter in conventional finance,” he said.
Some countries, including Tunisia and Libya, are keen to build Islamic banking sectors and are seeking technical assistance.
“The stakes are high; if people don’t do it right, this might discredit the industry,” Allaoui said.
Reporting by Bernardo Vizcaino, Editing by Andrew Torchia