Türkiye aims to position itself as the leading country in equity financing, commonly known as Islamic finance, a senior financial official said on Tuesday.
“Unlike many countries that claim to be an Islamic financial center in the world, Turkey has very important advantages based on its historical, cultural, geopolitical and economic background,” said Göksel Asan, head of the presidency’s Financial Office, in an act of publicity for participation. financial strategy document in Istanbul.
He said they have been working towards that goal.
His remarks came a day after President Recep Tayyip Erdoğan pledged to take further steps to promote the development of equity financing.
Erdogan said on Monday that the participation financing system does not have its potential in Turkey, where people’s religious sensitivities are high.
Asan said they see the participatory financing system not only as a structure that makes good use of savings in accordance with religious sensitivities, but also as an engine that has the potential to play an important role in development and financial independence of the country.
The equity finance strategy paper, he said, includes concrete steps to carry out the strategic transformation that will enable equity finance to reach the place it deserves in 2022-2025, which he described as “the period of transformation holistic”.
While developing the document, the Istanbul Financial Center was taken into account along with the macroeconomic goals for strong, sustainable and inclusive growth and the UN Sustainable Development Goals.
“Thus, we intend to operate in accordance with the spirit of participatory financing, which is one of the two pillars of the Istanbul Financial Center project,” he stressed.
The Turkish economy model will be more effective with the implementation of the action items that reflect the strategic goals of the document, Asan said.
In 2020, equity banks moved to create an investment bank with a mandate to invest in Islamic assets, and the government created a new department within the Office of Presidential Finance to promote Islamic finance.
The new department focuses on raising awareness of financial participation and developing field strategies.
It also aims to foster cooperation between public institutions, the private sector, universities and non-governmental organizations (NGOs) in order to improve Islamic finance.
By 2021, global ratings agency Moody’s said Turkey’s Islamic banking assets would at least double over the next five years, helped by supportive regulations and an expanding distribution network.
This rapid growth is supported by Turkish government policies and regulations and the expansion of participation banking networks.
Moody’s said at the time that the total assets of Turkish holding banks increased by 54% in 2020, outpacing the banking sector’s total asset growth of around 36%.
The report, however, noted that despite the likelihood that the Turkish participation banking sector will grow rapidly, it is still much smaller than in the Gulf Cooperation Council members, where Islamic banking assets average around 40% of the total assets of the banking system.