Rails, standards and capacity before Islamic finance scales

The common assumption is that demand holds Islamic finance back; the room argued that the bigger challenge is infrastructure. Conventional finance already moves trillions daily across instant, interoperable payment rails that Islamic finance still lacks. Nearly 500 Islamic FinTech firms operate across 41 countries, yet 80% are concentrated in just ten markets. Global Islamic finance reached about $3.9 trillion in 2024 and is projected to grow roughly 15% annually. India’s UPI, meanwhile, scaled from zero to more than 20 billion monthly transactions in less than a decade, demonstrating what is possible at both speed and scale. Panellists identified legal frameworks, Shariah governance and a common national payment standard as priorities, ahead of liquidity or deposit insurance. A Philippine Central Bank official called for licensing a pilot Islamic bank within twelve months rather than waiting for perfection. A Shariah chair stressed that digital tools cannot replace Ijtihad, making human capital equally critical. The challenge is not whether the rails can be built, but who builds them, to what standard, and in what sequence.

Uzbekistan now has the law, the mandate and the ambition for Islamic digital finance. Sovereign intent, however, holds only when prudential foundations sit firm: supervision, risk architecture and liquidity. The IFSB Secretary-General pushed for standards before scale, arguing that getting those right helps avoid spending a decade retrofitting trust after something breaks. Islamic finance reached 4.2 trillion dollars in global assets by the end of last year. Banking still accounts for close to 70 percent of global Islamic assets, while capital markets and Sukuk lack depth. Hybrid risks rise as Islamic bank balance sheets take on conventional attributes and higher gearing. Technology must redesign market structures for Islamic needs, not copy old frictions in digital form. Conventional banking needed almost thirty years and a global crisis to write its rulebook. Islamic finance must get the foundations right for sound growth without embedding vulnerabilities as the system evolves.

A national Islamic finance strategy is only half the work of building a real market. Capacity in institutions, supervisors and the workforce rarely exists the day a plan is signed. Human capital must be built to cover public financial literacy, upskilling and reskilling the central bankers, regulators and policymakers, and institutions that deliver the product. Turkey published its first participation finance strategy in 2022 and took lessons over time. Egypt has built Islamic finance infrastructure over decades across its financial system. Both countries show that sequencing matters as much as ambition from the start. An Islamic finance strategy needs local knowledge, step-by-step action and demand-side priority to succeed. Price friction and weak literacy still divert many clients toward conventional banking products. The session highlighted the need to build the tools to upskill human capital, create public or blockchain-based infrastructure to cut the compliance-verification cost, and treat Islamic finance not as a divide from conventional banking but simply as a new set of products with new features that consumers will accept on their merits

Almost no hands rose when the room was asked whether AI should approve a routine murabaha credit sale. Confidence fell further when the question shifted to AI approving any new Islamic finance product. The panel was clear: AI cannot replace muftis or Shariah boards and must never issue fatwas. Islamic jurisprudence blends settled rules with ongoing scholarly interpretation across the major schools and markets. While technology can handle clearly defined, machine-readable controls, supporting research, audit testing, document-heavy processes and compliance checks, human judgment remains essential for interpreting intent, handling exceptions and exemptions, and delivering final Shariah rulings. The principle is simple: even a 99% confidence score is insufficient if one Shariah condition is breached. Every decision must ultimately have a named human principal who owns it, because AI carries neither accountability nor responsibility. AAOIFI has begun developing governance standards for AI in Islamic finance, with an exposure draft expected in 2027.

The room opened debating a $2.1 trillion gap in how large global Islamic finance really is. One major data provider sized 2024 sector assets at about $6 trillion. The Islamic Financial Services Board (IFSB), using regulators' returns, put it at $3.9 trillion the same year. Most of that gap is from Iranian banking assets, about $2.15 to $2.2 trillion, included by one side and excluded by the other. Panellists, however, agreed that sukuk has crossed $1 trillion, with growth increasingly coming from Central Asia and Africa. Panellists also stressed that the industry is not homogeneous across markets, and what may count as acceptable Islamic finance in Malaysia is often not acceptable in Saudi Arabia or the UAE. Investor confidence depends on shared product definitions, IFSB risk buckets, common standards, and independent checks on asset backing. For new markets such as Uzbekistan, the practical step would be early sukuk issuance to create a track record that investors can trust.

Two institutions put their names to a pioneering expression of intent in Tashkent. The Central Bank of the Republic of Uzbekistan and GFTN set a shared course for an Islamic digital economy. That economy is meant to stay open across borders, trusted by communities, powered by new tools, and open to all. The pact names two concrete areas to explore together from day one. First is a cross-border regulatory sandbox framework with open standards and shared reference tools. Second is a coordinated effort to support customer education across markets. Leaders cast the signing as a starting line anchored in Tashkent. Policymakers and regulators from across the region and the wider world stood as witnesses on stage. The host closed the full day by fixing a new digital Silk Road on true north.