"Humanistic Finance" and Sustainable Development

Regional Economy 12.03.2021, 00:12
"Humanistic Finance" and Sustainable Development

Kerem Alkin

The international finance system is going through one of the most challenging periods of its history. Today, it has become increasingly difficult to maintain the relation between production and money markets as it is, especially considering the global debt pool that has increased 3.5 times bigger than the global GDP, reaching $280 trillion at the end of 2020 with the impact of the global pandemic. We cannot really talk about "sustainable development" for the world economy under the global financing system of today that is almost "milking" the added value out of the real sector and far from helping the production, investment, employment, and export attempts of the national economies for higher added value and hinder them from time to time instead.

Following Turkey's example on its pioneering role and cooperation to change the courses of other countries for the better with an "Entrepreneurial and Humanistic Foreign Policy", the Istanbul Finance Centre, which is planned to start its activities in 2022 and turn into a regional centre of attraction in no time, will contribute to the global financial system with the "Humanistic Finance" philosophy through innovations for the participation finance system, and new approaches to support and develop the investment, production, and export attempts of the real sector.

And the establishment of the Participation Finance Department under the Finance Office of the Presidency with the Presidential Decree is a critical step in this regard. Even though the global potential of the participation finance system is around $10 trillion, it has only one-quarter of this potential volume with $2.5 trillion today. The steps that Turkey will take in this regard can help the system fulfil this potential with the introduction of new investment tools and instruments and new financing models based on the fundamental principles of the participation finance system that support the real sector.

And the Participation Finance Department was established with that goal in mind under the Finance Office of the Presidency. These new approaches towards the participation finance system will lead to new roadmaps, bring coordination between the relevant public institutions and organisations, create the first holistic participation finance system strategy of Turkey, and observe whether this strategy is implemented or not. There will also be cooperation between the public and the private sector, universities, and non-governmental organisations in the participation finance area.

A new financial architecture is required globally for the next 5 years. Participation finance has the potential to make great contributions to create a new global financial architecture with an understanding based on risk-sharing that places people at its centre, prioritises moral values, and supports the real sector. With this goal in mind, we set sail to a new period in which Turkey will be the pioneer of a participation finance system that will give the biggest support for the goals of the UN sustainable development goals in the wake of a moral and humanistic world.

Source: Sabah

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