US studying features of Islamic banking

[Rambo]

US studying features of Islamic banking
Md. Rasooldeen | Arab News
INTEREST: Robert M. Kimmitt, US deputy secretary of the Treasury, right, and US Ambassador Ford M. Fraker at the press conference held at the US Embassy in Riyadh on Saturday. (AN photo by Mohammed Rasooldeen) RIYADH: The US government is currently studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisis, Robert M. Kimmitt, US deputy secretary of the Treasury, said at a press conference held at the US Embassy here yesterday.
Kimmitt, who is on an official visit to the Kingdom, also held discussions with Finance Minister Ibrahim Al-Assaf. Today, he is scheduled to meet Saudi Arabian Monetary Agency (SAMA) Gov. Hamad Al-Sayari, Saudi Arabian General Investment Authority (SAGIA) Gov. Amr Al-Dabbagh, Prince Alwaleed bin Talal, chairman of the Kingdom Holding Company, and Saudi investors and bankers. He said that the agenda for the G-20 summit to be held in Washington on Nov. 15, has to be carefully prepared since important topics are to be discussed in just one day. “I am not sure that Islamic banking will also be itemized in the agenda, but it is a subject that is often dwelt in the public and private sectors,” he noted. He said that experts in the US Treasury Department are currently learning the important features of Islamic banking.
However, he added that his country is focusing on activities of various governments and central banks in tackling the economic issues. He pointed out that the member countries in the G-20 also includes Islamic countries such as Indonesia and Turkey, besides the Kingdom which has been a member for the past 10 years. Representatives from these countries could present their experiences of Islamic banking in the light of the prevailing situation.
He hoped the G-20 summit will provide an effective platform for the member countries to exchange their views on the current economic problem and lay out a plan for the countries to draw out their respective national plans to ease the situation.
Commenting on his meeting with Al-Assaf, Kimmitt said the items that could be included in the agenda were also discussed. “The geographical representation from member countries would provide a broader view of the crisis and would also benefit the non-member countries through their experiments,” he added.
The G-20 summit, said Kimmitt, was proposed by Europeans which was readily accepted by President George W. Bush, who is seeking a common response to the global crisis.
Spelling out the purpose of his visit to Saudi Arabia, Kimmitt said that he has been associating with the Kingdom for more than two decades, but this is a significant visit since he was coming to the Kingdom at a time when there is a threat to the global financial market. “It’s an opportunity for me to present the US perspective ... and hear from the Saudi leadership on the current situation in the Kingdom and in the region,” he said, adding that even at a time of crisis, US wants to stress its commitment to tell the countries in the region of the US open investment policies.
Pointing out that a good number of American investors are coming to the Kingdom, Kimmitt said the US government expects reciprocation in the same manner. The deputy secretary is slated to visit the United Arab Emirates, Qatar, Kuwait and Iraq where he would meet the leadership and investors on similar lines.


US studying features of Islamic banking

[Rambo]

Australia considers adopting Islamic banking

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Updated October 23, 2008 21:32:58
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Financial institutions and the government are considering introducing Islamic banking and its principles to the Australian financial system.

Industry experts say Islamic banking is one of the fastest growing sectors in the global banking industry, and is worth an estimated $US200 billion worldwide.

The Asialink Islamic Banking Colloquium, held in the Australian city of Melbourne, has heard Islamic banks have largely escaped the fallout from the economic crisis by adhering to Islamic principles of prohibiting interest and sharing of profit and loss between banks and borrowers.

A leading academic on Islamic banking, Professor Abdullah Saeed from Melbourne University, says there is potential for further growth in Australia.

"There is a significant Muslim community here, but its not just for Muslims in Australia," he said.

"A lot of conventional banks are interested in and a number of Islamic banks are actually moving into Australia so we're not just talking about a Muslim issue.

"It is one of the ways of dealing with banking and finance [which just] happened to be called Islamic."

Australia considers adopting Islamic banking

[Rambo]

Europe takes closer look at Islamic financing

By Brett Corbin
Published: October 24, 2008


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PARIS: With commercial bank financing tight, Europeans have been taking a closer look at Islamic banking.
"The potential is there," Ahmad Jachi, the first deputy governor of the Central Bank of Lebanon, said at a conference this past week in Paris. "It's a matter of really enabling and creating the market."
Islamic banking has already been integrated into the British and German banking systems, and banking executives at the conference said efforts were under way to allow Muslims in France to bank and invest under regulations that conform to Shariah, the legal code of Islam.
Estimates of the Islamic banking market's current size vary from $500 billion to $1 trillion. It has only about 5 percent of the overall banking market, but attendees at the conference, which was sponsored by The Economist, said Islamic banking has a huge potential for growth, since one-sixth of the world's population is Muslim.
The International Monetary Fund estimates that the Islamic banking sector has grown 10 percent to 15 percent a year over the past decade.

There is no specific code to govern Islamic financing. Businesses that are trying to be compliant usually set up a board of Islamic scholars who study the investment structures and products and reassure investors or customers that their money is being held under Shariah guidelines. Mufti Abdul Kadir Barkatullah, an imam in Britain and a Shariah scholar who is regularly consulted by corporations, said Islamic banking regulations generally require investors to be "very prudent and careful with your money, and you only put your money to very good uses."
One general principle that has proved useful of late is that banks are not allowed to be heavily leveraged or to take too many risks.
The lender and the borrower share the risks and the rewards of a loan - which means loans can have no interest rates attached. Investments are also not allowed to profit from an enterprise involved with conventional finance, weapons, tobacco, gambling, pornography or alcohol.
But Haider Ala Hamoudi, a professor at the University of Pittsburgh Law School, said the differences between Islamic and Western-style banking were "more rhetoric than reality."
"It really is effectively the same thing economically," he said by telephone. "I think it's going to grow for some time," he added.
One company to benefit from Islamic banking is Velcan Energy, which has 200 employees, is based in Paris and develops hydropower plants in Brazil and India. Antoine Decitre, managing director at Velcan, said he was contacted by an Islamic bank, which he was not authorized to identify, that said it was interested in the company because it was environmentally friendly and its projects helped poor people in developing countries.
Velcan was able to get capital to execute its projects without having to wait for credit markets in the West to unfreeze, Decitre said. But the process has taken some time because the practices were new to Velcan. "There are many conflicting views about what you and cannot do," he said. "So take your time well in advance."

Europe takes closer look at Islamic financing - International Herald Tribune

[SyedShoaib786]

yeah...interest caused this mess

[psychoteddybear]

that's pretty cool...

wa salam

[hammadrizwan]

The most 'salient' feature of Islamic Banking is not screwing people over... I'm sure the US Govt is keen on implementing that, especially since they've reached the levels they've attained because of it.

It's all lip-service..

[the_wrong_guy]

Islamic Banking is an emerging discipline and is not without its critics, Muslim and non-Muslim, laymen and experts. Timur Kuran's Islam and Mammon attempts to raise doubts over the very bases of Islamic Banking and Economic Theory, but his criticism leaves us wanting. There's obviously a lot of mixing up of fact and fiction followed meaningless emotional rhetoric in his arguments, but he raises (at least) two very important objections: one from a philosophical perspective, and the other from a historical and practical perspective. I am yet to see any coherent intellectual response to Kuran's criticism from Islamic economists.

Mufti Taqi Usmani recently wrote a paper claiming that almost 80% of the Sukuk transactions offered by Islamic banks are haram, and based on my current understanding of the system, I completely agree with him.

So basically, it's great that people are attempting to present and practice an economic system based on Islamic teachings and values, but there's much that still needs to be done and many issues that still need to be worked out.