Magazine article Global Finance

Accounting Change Gives Shariah-Compliant Institutions Chance to Go for Gold

Magazine article Global Finance

Accounting Change Gives Shariah-Compliant Institutions Chance to Go for Gold

Article excerpt

The Accounting and Auditing Organization for Islamic Financial Institutions (Aaoifi) has issued a new shariah standard on the use of gold. It allows financial institutions to apply shariah principles in the direct physical handling of gold and in using the metal as an underlying asset in financial transactions. The new standard is expected to open new business opportunities for Islamic financial institutions (IFIs), as well as to stimulate additional demand for gold.

With gold now to be used to back shariah-compliant financial products, IFIs will have enhanced flexibility in structuring their offerings, providing an opportunity to widen their product range. This, in turn, could enhance their ability to attract new clients, helping to bridge the option gap between IFIs and conventional institutions.

Specific gold-based products, whether for investment or financing, will be introduced by IFIs. …

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