Durmuş Yılmaz: Islamic finance – during and after the global financial crisis Speech by Mr Durmuş Yılmaz, Governor of the Central Bank of the Republic of Turkey, at the Conference on “Islamic finance – during and after the global financial crisis”, IMF-World Bank Annual Meetings 2009, Istanbul, 5 October 2009. *  *  *  Distinguished Guests, I want to begin my speech with expressing my heartfelt condolence to the loss of lives by earthquake in Indonesia. I am honored to address such a distinguished audience in Istanbul. It is a great pleasure for us to host this conference. In my presentation today, I will address the growing interest in Islamic finance, which has been proven to be relatively immune to financial crisis during the current episode, especially compared to the conventional financial institutions. Increasing popularity of Islamic finance can be attributed first to the enormous volume of loanable funds that accumulated in geographies that host Islamic practices of living. Islamic finance as yet another alternative to mainstream finance can be mentioned as a second reason. It is by now a de facto practice and this makes enough motivation to study, talk about and assess Islamic finance. Dear Guests, Islamic financial institutions have started to emerge in the second half of the twentieth century and become one of the fastest growing segments in the global financial system over the past three decades.
Although, Islamic finance institutions are mainly founded in the Middle East and South-east Asia, the interest has extended to Europe and the United States. Today, the size of Islamic banks around the world is estimated to be more than USD 250 billion and expected to grow by about 15 percent annually. Due to the growing importance of the Islamic finance, the Islamic Development Bank (IDB) was established in December 1973. The purpose of the Bank is to foster economic development and social progress of Muslim communities individually as well as jointly in accordance with the principles of Islamic Law. The number of members to the Bank is steadily enlarging and currently consists of 56 countries. The primary functions of the IDB are to participate in equity capital and grant loans for productive projects and enterprises besides providing financial assistance to member countries in other form for economic and social development. The Bank is also required to establish and operate special funds for specific purposes including a fund for assistance to Muslim communities in non-member countries, in addition to setting up trust funds. The Bank is authorized to accept deposits and to mobilize financial resources through Shari'ah compatible modes. It is also charged with the responsibility of assisting in the promotion of foreign trade especially in capital goods, among member countries; providing technical assistance to member countries; and extending training facilities for personnel engaged in development activities in Muslim countries to conform to the Islamic Law.