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      From the Silk Road: State of Play for Islamic Digital Finance

      Welcome to Policy Loop. Each monthly edition takes a conversation from across the GFTN network and asks what it means for policymaking. This edition is from the Silk Road Finance & Technology Forum's final day on Islamic Finance, held on 26 August in Tashkent, Uzbekistan.

      Held just eight weeks after Uzbekistan’s new law put Shariah-compliant institutions on an equal legal footing with conventional banks, discussants quickly agreed that demand isn't the problem. The open questions were on payment rails, regulatory readiness, and why the industry can’t agree on its own size.

      What we learned

      Islamic finance is older than modern banking. Even so, much of today’s industry simply runs on conventional products, adapted to comply with Shariah.

      The question now is integration into the mainstream financial system.

      That starts with trust. Few consumers understand how Islamic products work, nor do many finance professionals. Both retail customers and international investors need clearer laws, stronger governance and products whose compliance can be independently verifiable before they commit at scale.

      The facts in brief

      Demand is structural
      A UNDP survey found that 68% of Uzbekistan’s population and 60% of its businesses avoid conventional banking for religious reasons. This leaves untapped capital sitting outside the formal system.
       
      Law ≠ trust
      A licence, tax neutrality and sukuk rules are necessary. Whether the market scales or stalls depends on supervision, risk architecture, and secondary market liquidity.
       
      Start from international standards
      Conventional banking has taken decades and global crises to write its rulebook. Standard setting bodies such as Islamic Financial Services Board (IFSB) will play a critical role in aligning standards and prudential norms across borders to support existing and new models and facilitating technical cooperation.
       
      Infrastructure and data remain scarce
      Islamic products need instant payment rails and comparable asset definitions more than another awareness campaign. A >$2 trillion industry-size gap (ELSEG ~$6T vs IFSB $3.9T) already undermines investor confidence and slows cross-border activity.
       
      Human capital is strategy
      Central banks launching an Islamic finance strategy should focus on credible supervision. Literacy, regulator capability, and institutional delivery capacity are three distinct programmes that jurisdictions will need to embark on to develop a functioning and robust Islamic finance ecosystem.

      The policy action: Build trust before scale, turn intent into pilots and always measure

      1. Build trust before scale

      In the first 12 months, central banks launching an Islamic finance strategy should put supervisory credibility ahead of the number of licences issued. The IFSB 2026–2030 roadmap has 39 action items. Supervision, risk architecture and liquidity tools should come first, so that frameworks are ready before market volume grows.

      Payment infrastructure matters too. Make sure the national payment switch, QR payments and open-banking APIs can handle Islamic products without manual workarounds.

      2. Turn intent into pilots

      GFTN and the Central Bank of Uzbekistan (CBU) signed the Azimuth Intent at the forum. It sets a shared direction for an Islamic digital economy, starting with a regulatory sandbox and common adoption goals across the Gulf, Central Asia and South Asia.

      The next step is a time-bound pilot of one or two cross-border use cases, such as sukuk distribution or Islamic MSME finance.

      3. Measure outcomes

      Publishing a national Islamic finance statistics dashboard and collaborating with standard setters and other markets is key to ensuring data consistency across borders.

       

      Closing the Loop

      Islamic finance will be on the Policy Stage at the Singapore FinTech Festival 2026

       

      The conversation from Tashkent continues at the Singapore FinTech Festival 2026.

      Several jurisdictions are now laying the legal and regulatory foundations for Islamic finance, from first sukuk issuances to Islamic banking pilots in regulatory sandboxes. Newer markets have a chance to build transparency into their market infrastructure from the start, rather than retrofit it later.

      At SFF 2026, Maha El Dimachki, CEO of GFTN Solutions, will moderate a panel of central bank leaders and the global standard setter for Islamic finance.

      They’ll look at how tokenization and digital verification can make Shariah compliance more auditable and consistent across institutions and borders, while keeping scholarly judgement at its core. They’ll also discuss what shared standards emerging markets need to connect with global pools of Islamic capital.

      When: Friday 20 November 2026, 1:00–1:30pm SGT

      Where: Policy Stage, Hall 3, Singapore EXPO 

      Reference the Session Reports