Turkish watchdog to revise Islamic banking regulations

ANKARA

The head of Turkey’s banking watchdog on Thursday pledged to revise the regulations governing the Islamic banking sector.

Mehmet Ali Akben, president of the Banking Regulation and Supervision Agency, said there was a need for changes to the rules governing what are known as “participation banks” in Turkey.

“We are trying to readjust those rules,” he told an Islamic finance conference in Istanbul. “We believe this system will shine out on both a local and global scale in the coming years.”

He said there was demand for a financial model working under non-interest based rules.

Talat Ulussever, chairman of the Borsa Istanbul exchange, called for a system in which members of the public could invest in major projects.

“We need to exert effort in establishing financial structures in which Turkey’s big projects in areas such as energy, communication, defense and infrastructure will be financed by people and profit will be shared by them,” he said.

Ulussever said the 2008 financial crisis showed that conventional finance was could not absorb volatility in global markets.

“There is a recent survey from the OECD [Oragnization for Economic Cooperation and Development] that indicates financing through credit has a negative affect while economies that prefer stock exchanges for their financing needs grow faster and sustainably,” he said.