This development will help open up the banking sector in the Middle East, Asia, and Africa. Already Canadian and Indonesian firms have gained sharia-compliant certification for their banking products.
The Islamic Research and Training Institute, the research arm of the Islamic Development Bank (IDB), said it plans on using blockchain technology to develop sharia-compliant banking products to support financial inclusion across its member countries.
Jeddah-based Islamic Research and Training Institute said, it has signed an agreement with Belgium-based SettleMint and local firm Ateon, with the first stage of the plan focusing on a technical feasibility study.
This agreement is the latest effort aimed at combining blockchain technology with Muslim investors, with firms Canada and Indonesia already having received sharia-compliant certification for their products.
The involvement of IDB is likely to spur the involvement of fintech companies so that they can tap markets across Africa, Middle East and Asia.
As per IDB, with the blockchain technology allowing all parties to track information through a shared electronic ledger, which removes the need for third party verification, such features will enable faster clearance and settlement of transactions of asset exchanges and at the same time help eliminate counter-party risks.