(Reuters) - The research arm of the Islamic Development Bank plans to use blockchain technology to develop sharia-compliant products, aiming to support financial inclusion efforts across its member countries. The Jeddah-based Islamic Research and Training Institute said it had signed an agreement with local firm Ateon and Belgium-based SettleMint, with the first stage to focus on a technical feasibility study. The agreement is the latest effort to combine blockchain technology to tap demand from Muslim investors, with firms from Indonesia to Canada having already received sharia-compliant certification for their products. Involvement of the IDB, a multilateral development institution, could also encourage other fintech firms to incorporate Islamic finance to tap markets across the Middle East, Asia and Africa. Islamic finance follows religious principles such as a ban on gambling and outright speculation, but until now the sector has focused on traditional retail banking services. Blockchain involves a shared electronic ledger that allows all parties to track information through a secure network, removing the need for third-party verification. The IDB said such features would allow for instantaneous clearing and settlement of transactions and asset exchanges, while helping eliminate counterparty risk. Reporting by Bernardo Vizcaino; Editing by Gopakumar Warrier
The Islamic Development Bank's research branch, the Islamic Research and Training Institute, aims to utilise blockchain technology to create sharia-compliant financial products. The Institute has agreed to work with digital solutions firm Ateon and blockchain minting firm SettleMint, with the first stage of the project being a technical feasibility study. "The aim is for us to develop an application that will allow people in Saudi Arabia to buy or sell products using cryptocurrencies," said Dr Abdullah al-Hamad, head of the institute. The move could also encourage fintech firms to include Islamic finance in their considerations across the Middle East, Africa and Asia.