Dubai – The Hong Kong Monetary Authority (HKMA) and the Dubai International Financial Centre Authority (DIFC) announced Monday that they signed an agreement to strengthen cooperation in the development of Islamic finance.
Both bodies signed a memorandum of understanding on Tuesday to work together in developing financial product and investment, which are compliant with Islamic religious law, known as Sharia, according to a press release issued by HKMA and DIFC.
The two financial authorities will cooperate in finding ways to promote Islamic financial activities on a cross-border scale, such as trading in sukuk, which is a type of Sharia-compliant bonds.
Sharia-complaint finance firms do not collect interest on investments and are not involved in short-selling stocks and investing in companies that promote gambling, pornography or alcohol?all prohibited by Islam.
‘The Memorandum of understanding gives us an opportunity to enhance cooperation between our financial infrastructures, in particular the payment systems of the two regions,’ Nasser al-Shaali, the DIFC Chief Executive Officer said.
The Islamic finance market has been rapidly growing since its inception over 30 years ago.
Islamic financial institutions hold assets estimated at over 300 billion dollars with another 400 billion dollars in financial investments, according to a 2006 study by the US-based accounting firm KPMG.
The study found that Islamic finance is growing at a rate of about 15 percent a year.
Financial experts predict growth of at least 20 percent in the Islamic finance sector in the next five years.
The DIFC is home to over 600 firms, including leading international financial services firms and banks.