KUALA LUMPUR: Bank Negara Malaysia (BNM) has highlighted initiatives that could enhance the regulatory environment in Islamic finance.
Bank Negara Malaysia governor Datuk Abdul Rasheed Ghaffour proposed three propositions to be considered within the Islamic finance realm to facilitate the application of a more diverse range of Shariah contracts.
In his welcoming remarks at the Global Forum on Islamic Economics and Finance, the governor shared propositions that could be discussed in the forum, among which include the embodiment of Maqasid al-Shariah in economic and sustainable reforms.
Abdul Rasheed also told the forum to consider efforts to advancing innovation in tijari (trade) and waqf as catalysts to reinforce an inclusive and resilient socio-economic model and strengthening global integration to propel mutual economic development and shared prosperity among Islamic nations.
This includes through increased intra-trade within the Organisation of Islamic Cooperation (OIC).
"We look forward to the efforts that will support these propositions.
This includes closer engagements with multilateral institutions and investors, as well as initiatives to enhance the regulatory environment to facilitate the application of a more diverse range of Shariah contracts," he added.
He noted there are various opportunities and challenges facing the global economy.
On the positive side, global trade is expected to strengthen, inflation is moderating, and positive labour market conditions continue to support global growth.
Nevertheless, downside risks remained as the threat of further escalation of geopolitical tensions persists, and higher than-anticipated inflation outturns might contribute to further volatility in the global financial markets.
"The climate crisis and environmental degradation also looms large, not only wreaking havoc in our physical world, but also threatening the lives and livelihoods of many.
"It is estimated that if no mitigating actions are taken, climate change could slice off up to 18 per cent of global GDP by 2050," he said.
These headwinds will aggravate economic inequality – widening disparities not only across but within countries.
Therefore, he added that principles of Islamic economics and finance hold the promise of driving value-based growth, beyond mere profit goals, one that is balanced, progressive, sustainable and inclusive.
"Aligned with the objectives of Shariah, we are called to foster shared prosperity. Throughout the history of Islamic civilisation, we have observed that the adoption of Shariah principles as the guiding light has coincided with periods of unparalleled societal advancement, marked by diminishing poverty and robust economic prosperity," added Abdul Rasheed.
He underscored three questions for the attendees to ponder on in the two-day forum which are methods to effectively apply the principles of Islamic economics and finance to tackle pressing global challenges facing our world today, how to ensure that Islamic finance remains grounded in its principles and what steps are needed to enhance economic, financial and monetary system that will further embody, both in form and substance, the fundamental principles of Islamic economics and finance.
"It is our hope that these questions can guide us along this journey, urging us to reflect, engage, and collaborate to seek practical solutions "via values-based reforms" towards a shared vision of a more resilient global Islamic economy," he said.