Islamic Banking Faces Challenges with CBDCs, says IMF Study | CoinGabbar

According to a study by the International Monetary Fund, the unintended consequences of a central bank digital currency (CBDC) may have a significant impact on the Islamic banking system. This is due to the complexities of CBDC design, which must comply with Islamic law prohibiting usury and speculation.

While only 2% of global finance is represented by Islamic banking, 10 countries with Islamic financial presence are currently considering CBDCs, including Iran and Sudan. Traditional liquidity management methods that rely on interest are not permitted for Islamic banks, posing a challenge to CBDC implementation.