Islamic economy should be turbulence-proof: central bank`s governor

Jakarta (ANTARA News) - Governor of Bank Indonesia Darmin Nasution said that apart from being run by Sharia principles, the Islamic (Sharia) banking and finance system should be able to withstand turbulence and economic pressures.

"Islamic banking and finance should not only be based on Sharia principles and standards of Islamic banks, but must also withstand turbulence and economic pressure," Darmin said here Wednesday.

According to Darmin, Islamic financial standards are not strong enough to face the current economic conditions, such as the financial crisis in Europe and market volatility in developed and developing countries. Thus, it is a challenge for the actors to be able to develop the Islamic financial system and increase financial stability.

"Can the practice and rules of Sharia promote financial stability, given that the existing global crisis requires us to be able to strengthen macro and micro policies with the precautionary principle?" he added.

To maintain financial stability, the Islamic financial system can play an important role in ensuring the growth of the industrial sector.

In line with Nasution, the Malaysian State Bank`s Governor Zeti Akhtar Aziz said the Islamic financial system had vulnerabilities and needed to maintain its stability.

"Islamic financial system can be a powerful system, in which Islamic values are implemented," he said.

Moreover, global Islamic financial assets are worth more than one trillion U.S. dollars. This shows that the Islamic financial system has developed rapidly and can support the economic stability of a country.

Data from the Global Islamic Finance Forum showed that global Islamic financial assets reached 1.34 trillion U.S. dollars in 2012. They were dominated by the Gulf Cooperation Council with 0.5 trillion U.S. dollars, while 0.28 trillion dollars were in Asia, and the U.S. and North African countries had 0. 47 trillion dollars.