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The last fifteen years have been transformative for Islamic finance, with the industry transitioning from being quite niche to holding a position of real significance within global financial services arena.

The Islamic finance industry is currently estimated to be worth over USD2.5 trillion, and is expected to reach around USD4 trillion by 2025. This is largely due to financial regulatory reforms; the industry's commitment to standardisation; the burgeoning market for Islamic FinTech; the global spotlight on ESG; and a focus on green investments.

Clearly, there is an opportunity for Islamic finance to take centre stage as the demand for Sharia-compliant products continues to push beyond the core Islamic finance markets.

Key and emerging themes in Islamic finance

Paul McViety (Head of Islamic Finance – Middle East), and Sohail Ali (Partner – London) recently joined IFN to discuss some of the opportunities and challenges for the globalisation of Islamic finance, including:

  • The importance of ensuring that its core values are applied to achieve a sustainable and socially responsible financial system;
  • The rapid growth of digitalisation in Islamic finance, particularly as a result of COVID-19;
  • The discontinuation of the London Interbank Offered Rate (LIBOR) and its impact on Sharia-compliant transactions; and
  • The need for more litigation funding solutions in Islamic finance transactions as current global economic uncertainty increases the levels of distressed debt.