Efforts to develop Islamic financial systems

A survey conducted by the IMF analyzes the Islamic banking system as a whole. It closely examines the principles under which the system operates, such as profit-and-loss-sharing, and the impact of this system on the mobilization of savings, the allocation of scarce resources through banks, investments, and monetary policy. It also looks at the differences between interest and profit are different and the means of financial intermediation in an Islamic economy. An investment auctioning system is an alternative to profit-and-loss-sharing. In such a system, a financial institution auctions the authorization to invest to those interested in investing in something. If a profit-and-loss-sharing scheme is established as an alternative to interest-bearing accounts, savings will probably be influenced positively. A total switch to such a system, however, needs as pre-requisites proper responses to a number of issues. Such responses are not yet ready.