Islamic finance bodies to develop gold standard

The World Gold Council and the Bahrain-based International Islamic Financial Market (IIFM) are looking to develop a sharia-compliant standard for gold contracts that could see the asset class more widely employed in Islamic finance.

Under current Islamic finance rules, gold is classified as a currency and is limited to use in spot transactions.

A number of industry bodies, such as the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), have looked to expand the number of gold-based financial products deemed permissible under sharia law.

Executives from the World Gold Council and the IIFM met in Istanbul to discuss transaction documentation for a number of sharia-compliant, physical gold products including investment accounts, regular savings plans and exchange-traded funds.

Managing director of central banks and public policy at the council, Natalie Dempster, said the collaboration with the IIFM would “provide greater access to the gold market and open up a new investment class for sharia-compliant investors to deploy their wealth and diversify market risks”.

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