CBA: Islamic finance contributes to building adaptive financial systems

Islamic finance is a tool for inclusive economic development, Governor of the Central Bank of Azerbaijan (CBA) Taleh Kazimov stated at the 20th IsDB Global Forum on Islamic Finance in Baku within the framework of the Islamic Development Bank (IsDB) Group's 51st Annual Meeting, Report informs.

Kazimov noted that the global economy is currently undergoing profound structural changes, making the role of Islamic finance increasingly important: "Growing fragmentation in trade and rising uncertainties necessitate the creation of adaptive and inclusive financial systems. With its risk-sharing approach and reliance on ethical principles, Islamic finance offers practical tools that can contribute to building such systems."

The CBA governor emphasized that successful development of Islamic finance in Azerbaijan requires progress in two key areas: "First, improving the legal framework and ensuring transparency in the regulatory environment. Second, building and developing professional human capital to ensure the effective functioning of the Islamic financial system."

He added that the application of Islamic finance will be expanded gradually: "We are already taking concrete steps in this direction. Amendments are being prepared to the Civil Code, Tax Code, and financial legislation to expand the use of Islamic finance instruments. The goal is to establish a fair and neutral regulatory environment between conventional and Islamic finance. Considering the current readiness of market participants, we have prioritized the implementation of the 'Islamic window' model at the initial stage. In later stages, we will assess market demand and decide on full-scale application."

Kazimov also highlighted the active use of the regulatory "sandbox" mechanism: "Currently, two banks are successfully testing their products on this platform under the supervision of the Central Bank of Azerbaijan."