The sector has been extended to Britain and Hong Kong for instance IMF's Zeid Zidane told KUNA.
Many member states willing to introduce Islamic finance to their banking systems had sought IMF technical assistance leading to the survey that offers an institutional view on the issue.
Islamic finance constitutes 15 percent of the banking assets in 10 world countries 50 percent in Saudi Arabia 30-40 in Kuwait 20-50 in the rest of the Gulf states Zidane noted. Iran and the Sudan adopts full Islamic systems The IMF survey has revealed that the Islamic finance faces major challenges if it is to unlock its huge potential and develop safely.
The ethical-based fast-growing sector still lacks regulatory and supervisory frameworks catering to its unique risks the IMF said noting that it has so far been governed mostly by frameworks developed for conventional finance. In addition the cross-border operations of Islamic financial institutions have expanded considerably without regulatory harmonization.
The industry still lacks economies of scale and operating in an environment where legal and tax rules financial infrastructure and access to financial safety nets and central bank liquidity are either absent or do not take its special characteristics into account the IMF said.
Islamic finance bans interest products with excessive uncertainty gambling short sales and financing prohibited activities considered harmful to society. The industry is also based on shared profit and loss which minimizes risk for banks and avoids dealing in debt and derivatives such as foreign exchange forwards and futures the IMF said.
The sector has doubled in size over the past four years and is now worth more than USD2 trillion (1.76 trillion euros) as demand for its products rises rapidly. Around 40 million of the world's 1.6 billion Muslims are clients of the Islamic finance industry which has surged in popularity since its niche market days of the early 1970s.