Islamic finance standards spur development of gold, silver products

MANAMA: New standards for the use of precious metals in Islamic finance are encouraging the development of financial products based on gold and silver, from futures contracts to a mobile app. The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), which sets guidelines followed in whole or in part by Islamic financial firms around the world, approved new standards last month for precious metals. The standards will reduce uncertainty over what is religiously permissible, which has hampered development of products using precious metals. The greater clarity provided by the standards could spur an increase in the use of gold and silver in Islamic finance over the next few years. It is too soon to gauge the extent of that increase, but some companies have begun testing the Islamic market’s potential. — Reuters