Minister Şimşek: Islamic financing can provide us with a beneficial route

Speaking at the ISTANBUL World Islamic Economy Summit, Treasury and Finance Minister Mehmet Şimşek said, "When we consider the challenges we face today, Islamic financing can actually be a very useful instrument and a useful route for us. This is our basic message for the equal sharing of prosperity." Speaking at the program, İlim Yayma Foundation Board of Trustees Chairman Bilal Erdoğan said, "We need to strengthen the concept of a human-centered economy. We are talking about a model where ethics, compassion and responsibility are at the center of production, consumption, distribution and finance."

The summit, which will continue until June 1, is being held at the Istanbul Finance Center, hosted by Halkbank, with the theme of "Islamic Economic Strategies on the Path to an Effective Global Economy." The summit, which is being realized with the strategic partnership of the Investment and Finance Office of the Presidency of the Republic of Turkey, Turkey Wealth Fund (TVF), Islamic Cooperation Youth Forum (ICYF), Ibn Haldun University, Istanbul Finance Center (IFM) and AlBaraka Group, was attended by Minister of Treasury and Finance Mehmet Şimşek, Chairman of the Board of Trustees of the İlim Yayma Foundation Bilal Erdoğan, Chairman of the Presidential Investment and Finance Office Burak Dağlıoğlu, CEO and Board Member of the Turkey Wealth Fund Salim Arda Ermut, Governor of the Central Bank of Turkey (MB) Dr. Fatih Karahan and United Nations (UN) Special Representative for Sustainable Development Financing Dr. Mahmud Mohieldin.

Speaking here, Treasury and Finance Minister Mehmet Şimşek said, "Today, of course, we will talk about Islamic finance; however, I think we should start by considering the global environment we are in, the big picture. Political uncertainty has never been higher. I am not just talking about trade policies here, where uncertainty is really at its peak. I think the world is trying to navigate against serious headwinds. This may sound quite negative, but in fact, every challenge also contains opportunities if you are positioned correctly, if you can understand it and intervene. That is why I would like to start today by talking about some of the global challenges and how they affect Islamic finance, and how we can address these vulnerabilities."

'THERE IS A GEOSTRATEGIC COMPETITION BETWEEN THE USA AND CHINA'

Şimşek said, "The world is currently experiencing a 'VUCA' moment. VUCA is an acronym used by the US military and it refers to four concepts: Volatility, uncertainty, complexity and ambiguity. We have been going through this VUCA moment for a while and as I said, it is not limited to trade policies. The answer to why is very simple. There is a geostrategic competition between the US and China and this is causing serious disruptions and fragmentation in trade. This is an important issue in itself because historically, trade has been one of the engines of growth but now it is seriously faltering. It no longer works as it used to. The world is also facing high debt levels. We know that high leverage ratios are often associated with macro-financial instability. Of course, we are on the verge of an artificial intelligence revolution. Whether we are talking about general artificial intelligence or super artificial intelligence, this is now on the horizon. This means enormous potential in terms of productivity. But at the same time, not everyone will have equal access to these technologies, and it is not possible to achieve equal access on a global scale. "It means deteriorating opportunities and increasing inequalities. Inequalities could be a major source of tensions in the future," he said.

'IT WORKS BASED ON EQUAL PARTICIPATION'

Minister Şimşek said, "The climate crisis is another big issue. Moreover, there are still ongoing hot conflicts, geopolitical tensions and wars. In short, the world is facing serious challenges and the methods of some major actors to deal with these problems are not helping. So, how can Islamic finance offer a way out at this point? I think this is the main question we need to talk about. Because growth will be rare now. In fact, growth has fallen significantly compared to the levels before the 2008-2009 global financial crisis. We see that growth will be below 3 percent and this may be even more difficult within the global movements we are talking about. So, how can we follow a path to provide shared growth and wealth here? Islamic finance can be a source of hope because when we share the risk, when the financing is also based on securities, we can provide better confidence. Financial instability continues as we see, and unity is at the source of Islamic finance because it works based on equal participation and as I said, inclusion is one of the main issues of Islam. Social inclusion, financial inclusion should be equal for everyone. Therefore, Islamic finance is a "When we consider the difficulties, it can actually be a very useful instrument and a useful route for us. This is our basic message for the equal sharing of prosperity," he said.

'WE NEED TO INVEST FOR THIS STRUCTURE TO GROW'

Minister Şimşek said, "When we look at Islamic finance, we see very rapid growth. Especially in terms of value and market share; but we need to be aware that the market share is slightly above 1 percent. When we look at global financial values, we have only reached 1 percent. So, if we really think that this is the best route for the continuation of the world, it is currently at such a small rate that we cannot focus entirely on it. But we need to invest in the growth of this structure. In order to achieve this, we need to understand what is holding us back."

BİLAL ERDOĞAN: WE ARE TALKING ABOUT A MODEL WITH ETHICAL COMPASSION AND RESPONSIBILITY

Speaking at the summit, Bilal Erdoğan said, “We must ask whether our financial products are compatible with Islamic ethical values. Are we content with simply avoiding interest or are we fulfilling our moral and social obligations? Are we integrating individuals into the system by empowering them or are we only interested in indebting them? Today, millions of people still live outside the banking system, not because they are excluded, but because the system itself has lost its humanity. Islamic finance should not only include these individuals into the system, but also elevate them with the dignity it offers them. Therefore, we must consider that more than 800 million people do not have access to clean water. I think you should add the 2 million in Gaza to this. More than a billion people face food insecurity, income equality is no longer a problem for developing countries, but also an issue on the agenda of the richest countries. We can change this, but we can only change this by putting people back at the center of our systems. Therefore, we need to strengthen the concept of a human-centered economy. We are talking about a model where ethics, compassion and responsibility are at the center of production, consumption, distribution and finance. This is exactly the model that Islamic finance proposes. Therefore, Zakat is not just an act of worship, but a mechanism for social equality. The foundation is not just a historical institution, but a formal structure for social solidarity. Charity is not just personal aid, but a tool to strengthen social justice. And profit-loss sharing is not just a financing model, but an ethical framework for sharing both risk and value. Therefore, we should focus not only on what we reject, but more importantly, on what we aim to rebuild instead. Therefore, dear guests, we should grow Islamic finance without breaking away from its ethical roots, and innovation rather than imitation should be the way forward. We should develop collective financial solidarity mechanisms, Zakat, foundation and Sadaqah to address global humanitarian crises.

DHA

Editor: News Center