Islamic Finance: Opportunities, Challenges and Policy Options

This staff discussion note represents an effort to take stock of the lessons learned in different areas of the development of islamic finance, and identifies policy issues that bear further consideration. Section II briefly explains the nature of Islamic finance. Section III presents the rationale for undertaking this work. Section IV discusses Islamic bank regulation and supervision, and related issues of financial stability and inclusion. The same issues are covered for Sukuk markets in Section V. Finally, Section VI discusses monetary, macroprudential, and tax policies.