A study paper issued by the International Monetary Fund has devised guidelines for the government to promote financial stability and develop Islamic banking system in the country by establishing a policy framework and environment. The fund is apparently interested in seeking a role in the Islamic banking in various Muslim countries. The Islamic banking system has a growing acceptance in various Muslim and non-Muslim nations and the international financial institutions, including the IMF, seems to be weighing options to find a role in it. According to the bank, the Islamic banking prevails in almost 60 countries of the world but there are also challenges for the financial experts and government authorities to maintain workable cooperation between the western interest-based financial system and the interest-free Islamic banking. Islam is the staunch enemy of interest-based economy and out-rightly rejects exploitation of human beings on the basis of money and all other things. It is also a test case for the country like Pakistan, which has been established in the name of Islam and its government is morally bound to establish corruption-free society. The Islamic banking system covers all the aspects of financial matters, including operations, balance sheet structures and risks which can be different from the conventional banking.
The study paper emphasized the need for putting in place an environment in the first place to promote financial stability under Islamic banking.The aspects covered under the system included legal, prudential and financial safety nets as well as countering the financing of terrorism and liquidity management frameworks and money laundering. According to the paper, the senior officials of the fund admit that the Islamic banking presents an opportunity to enhance financial intermediation and inclusion and mobilise funding for economic development. However, the officials also are also wary of the complexities, challenges and risks for regulatory and supervisory authorities under the Islamic system.No doubt interest-free financial system is a something which is difficult to understand by the non-Islamic financial experts because it gives a severe blow to exploitation of human beings in any sense. Islam advocates for fair trade and fair transactions of money without putting any extra burden on the beneficiaries. The IMF, the World Bank and the Asian Development Bank are some of the international financial institutions which were basically set up to control and regulate the international money.
Some financial experts call the international financial institutions as a new form of colonialism. Therefore, Islamic banking is the hope for the small and poor economies. Pakistan as the leading Islamic country should have to develop its financial system on Islamic banking and set an example for the other nations.
