Islamic finance expands to $6.2 trillion as Malaysia deepens MYOR-i
Global Islamic finance assets reached $6.2 trillion in 2026 following 13 percent annual growth, with total industry valuation projected to approach $9.6 trillion by 2030. Malaysia continues to anchor the sector, accounting for one-third of the international sukuk market.
Record order books and benchmark volumes
The global Islamic finance sector expanded to $6.2 trillion in assets across more than 2,200 institutions worldwide after recording 13 percent growth over the past year.
In Malaysia, which accounts for one-third of global sukuk volume, a $1.5 billion sovereign issuance under AAOIFI-compliant Manafae principles drew $9.5 billion in orders, marking a 4.7-fold oversubscription.
Domestic liquidity infrastructure also showed structural shifts: overnight Islamic interbank volume reached RM872 billion between January and mid-September 2026, exceeding conventional interbank trades of RM774 billion with daily averages of RM5.13 billion.
Sovereign depth fuels benchmark transition
Sovereign market depth has supported this expansion, with outstanding Malaysian Government Investment Issues rising from RM374.6 billion in 2020 to RM644.3 billion by June 2026.
Non-resident holdings expanded from RM24.8 billion to RM42.7 billion over the same period.
The transition to transaction-based benchmarks accelerates with an operational deadline on October 1, 2026, preparing institutions for a mandatory phase-in of MYOR-i across all new products by July 2027.
Deep benchmarks, narrow private debt
Rapid expansion in Islamic liquidity proves market depth beyond regional niches.
Yet heavy reliance on sovereign debt highlights lingering private issuance deficits.
The upcoming 2027 mandate will determine if banks can price risk without central bank backstops.