World Gold Council Wants to Create Standard to Avoid Islamic Finance Disputes

The World Gold Council is seeking to create a global standard to make the metal’s use in Islamic finance more cost effective by eliminating disputes among scholars.

The 18-member council and Amanie Advisors issued a consultation draft in November to Shariah professionals and practitioners. The WGC has also held bilateral meetings with banks and investment funds, who say that such a template will lead to more gold-backed products, Natalie Dempster, its London-based managing director of central banks and public policy, said in a Dec. 24 e-mail interview.

As the $2 trillion Islamic finance industry slows and sukuk sales falter, a new standard could be welcomed as differing perceptions of Shariah-compliance in Asia and the Middle East hinder development. Individual scholars currently vet gold products for conformity and Malaysian law firm Lee Hishammuddin Allen & Gledhill says there’s divided opinion on whether the commodity can be used as an underlying asset for Islamic bonds.

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