The Managing Director of the International Monetary Fund (IMF), Christine Lagarde, announced on 11 November that her institution would take a more important involvement in the development of Islamic banking, estimating that this sector could become a stability factor due to risk-sharing and exchange notions based on tangible assets.

"Islamic banking could in principle become a financial stability factor because risk sharing reduces the debt ratio and the exchanges are based on tangible assets and therefore fully guaranteed", she declared during a conference organised by the IMF and the Central Bank of Kuwait.

"Islamic banks also offer profit and loss sharing contracts which help to reduce losses and attenuate the risk of contagion in case of crisis in the banking sector", she added, indicating that this bigger capacity to absorb capital losses which is enabled by Halal financing is one of the key targets of the new reform of the world banking laws

Ms. Lagarde revealed during the conference that the IMF would take a more active involvement in the Islamic banking sector, with more bilateral monitoring and analytical support.

According to her, Charia-compatible finance should however increase in terms of client numbers, standardise norms and improve the legal framework in order to reach its full potential.

Islamic banking, which bans speculation, collecting interests and investments in risky and illicit assets such as gambling and short selling, still lacks a legal framework and control mechanisms.