Türkiye aims to position itself as the leading country in participation finance, commonly known as Islamic finance, a senior finance official said on Tuesday.

"Unlike many countries claiming to be an Islamic financial center in the world, Türkiye has very important advantages based on its historical, cultural, geopolitical and economic background," Göksel Asan, head of the presidency's Finance Office, told a publicity event for the participation finance strategy document in Istanbul.

He said they have been working to achieve this goal.

His remarks came a day after President Recep Tayyip Erdoğan vowed to take further steps to promote the development of participation finance.

Erdoğan on Monday said the participation finance system falls short of its potential in Türkiye, where people's religious sensitivities are high.

Asan said they see the participation finance system not only as a structure putting savings to good use in line with religious sensitivities but also as a driving force that has the potential to play an important role in the country's development and financial independence.

The participation finance strategy document, he said, includes concrete steps to realize the strategic transformation that will enable the participation finance to reach the place it deserves in 2022-2025, which he described as "the period of holistic transformation."

While the document was being prepared, Istanbul Financial Center was taken into account along with macroeconomic targets for strong, sustainable and inclusive growth and the U.N.'s sustainable development goals.

"Thus, we aim to operate in accordance with the spirit of participation finance, which is one of the two pillars of the Istanbul Financial Center project," he underlined.

The Turkish economy model will become more effective with the implementation of the action items reflecting the strategic goals of the document, Asan said.

In 2020, participation banks made progress toward creating an investment bank with a mandate to invest in Islamic assets, and the government set up a new department within the presidency's Finance Office to promote Islamic finance.

The new department focuses on raising awareness of finance participation and developing field strategies.

It also aims to boost cooperation among public institutions, the private sector, universities and nongovernmental organizations (NGOs) so Islamic finance can be improved.

In 2021, global rating agency Moody's said Türkiye's Islamic banking assets would at least double over the next five years, helped by supportive regulations and an expanding distribution network.

This rapid growth is backed by Turkish government policies and regulations and the expansion of participation banking networks.

Moody's said at the time that Turkish participation banks' total assets increased by 54% in 2020, outpacing total banking sector asset growth of around 36%.

The report, however, noted that despite the likelihood that Turkish participation banking sector will grow rapidly, it is still far smaller than in members of the Gulf Cooperation Council, where Islamic banking assets average around 40% of total banking system assets.