Islamic Banking—Stability Issues

The provision and use of financial services and products that conform to Islamic religious principles pose special challenges for a stability assessment. Institutions offering Islamic Financial Services (IIFS) and Islamic capital market instruments constitute a significant share of the overall financial system in several countries; in Sudan and Iran, the entire system is based on Islamic finance principles. This situation requires the recognition of the unique mix of risks in IIFS and key aspects of Islamic securities markets not only in stability assessments but also in the design of policies. See box 3.3 for details.

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