Islamic Development Bank to use blockchain for development of Sharia-compliant products

RIYADH: The research arm of the Islamic Development Bank [ISDBA.UL] plans to use blockchain technology to develop sharia-compliant products, aiming to support financial inclusion efforts across its member countries.

The Jeddah-based Islamic Research and Training Institute said it had signed an agreement with local firm Ateon and Belgium-based SettleMint, with the first stage to focus on a technical feasibility study.

The agreement is the latest effort to combine blockchain technology to tap demand from Muslim investors, with firms from Indonesia to Canada having already received sharia-compliant certification for their products.

Involvement of the IDB, a multilateral development institution, could also encourage other fintech firms to incorporate Islamic finance to tap markets across the Middle East, Asia and Africa.

Article continues after this advertisement

Islamic finance follows religious principles such as a ban on gambling and outright speculation, but until now the sector has focussed on traditional retail banking services.

Blockchain involves a shared electronic ledger that allows all parties to track information through a secure network, removing the need for third-party verification.

The IDB said such features would allow for instantaneous clearing and settlement of transactions and asset exchanges, while helping eliminate counterparty risk.

- Advertisement -
- Advertisement -

Must Read

Overseas remittances exceed $2bn for 10th consecutive straight month

Remittances from Pakistani workers employed abroad exceeded $2 billion for the 10th consecutive month in March at $2.7 billion — up 43 per cent...