Emerging markets must create valid legal conditions, a "level playing field," to gain access to Islamic finance at the international level, Zamir Iqbal, head of the World Bank Global Islamic Finance Development Center told the Anadolu Agency. Speaking at a G20 forum on Islamic finance in Istanbul, Iqbal said: "Islamic finance uses the techniques of securitization. This means that a good environment conducive to structured finance is needed."

Securitization, or structured finance, is the process of taking assets that produce income and using them to create security. In Islamic finance, all securities are linked to income-producing assets. Iqbal pointed out that emerging markets should have proper securitization laws in place before they can enter the international markets for structured finance -- that is, the legal conditions must be right within the domestic market. "It is possible for emerging markets to utilize other countries for international issuance, even if the domestic legal conditions are not in place. But that provides only limited market access; making conditions right at home is better than trying to work in other countries," Iqbal said. "Sound legal structure is what is needed; markets need to be able to create proper ownership of the assets so that they can be incorporated into the type of securitization used in Islamic finance," Iqbal explained. "Laws should be in place for transferring the ownership of assets to the special purpose vehicle (a company created for the sole purpose of holding the assets). This should create a level playing field, meaning that the tax conditions for this process should be fair. "Some emerging markets still have not done this; yet it should be easy to do," Iqbal said.

"International investors need these legal conditions in place because they will look at Islamic finance from an economic standpoint, considering the potential risks rather than the theological aspects of it. The legal conditions that govern it will be very important to them," Iqbal said.

The Turkish presidency has made great strides in bringing these issues to the fore in the G20, Iqbal said. When the presidency is passed to China, international interest in Islamic finance should continue, he added.