The limited number of Sharia scholars has meant the same
group of men are on various advisory boards which has led to criticism
that people can go "fatwa shopping" and that scholars are in it for the money.
It’s a myth to assume Islamic finance products are safer than conventional products and underlying risks should be studied more carefully, Qatar’s top regulator said at the Davos World Economic Forum meeting on Wednesday. Despite being billed as a safer alternative to traditional banking because assets must underpin deals, Islamic bondholders have found they may not have any more legal safeguards than conventional counterparts in the event of default.
Eager to attract Middle East investment but uneasy about linking faith and finance, the French parliament has opted for some legislative sleight-of-hand to pass a law allowing the issuance of interest-free Islamic “sukuk” bonds. The move is part of France’s two-year drive to create a new European hub for Islamic finance, whose value globally is estimated at $1 trillion. But instead of introducing a separate bill, which would attract attention to it, the governing UMP party tucked the proposed change of French trust law into a larger bill on financing reform for small and medium-sized companies. And it chose to do this by introducing it as an amendment in the second reading of the bill — the one that usually gets fewer headlines.
In researching an article on what lay behind government plans to develop France as a European hub for Islamic finance, I was struck by the uneasy atmosphere surrounding the subject. On the one hand, the government sees it as a way to attract Middle Eastern money and wants to push the idea. But on the other, there is a clear sense of apprehension over how Islamic finance would fit into French society, where the policy of laïcité — the strict separation of church and state — tries to keep anything religious out of the public sphere as much as possible.
from Global Investing:
Is diversity of opinion boon or bane for Islamic finance?
Market participants gathered for a conference at Thomson Reuters’ London headquarters earlier this week discussed the need for more convergence in the industry estimated to be worth $1 trillion.
Articles about Islamic finance are usually long on finance and short on Islam. Knowing that the various schools of Islam can interpret and apply sharia in different ways, I recently wondered how this looked in the financial sector, especially since Islamic banking has spread in recent years and non-Muslim institutions and investors were getting into the business. A conference on Islamic banking in France brought several sharia scholars to Paris, so I took the opportunity to interview them for the news story posted here.
At a time when many critics are calling for tighter regulation of the worldwide financial industry, Muslim scholars are saying that Islamic finance cannot be more tightly controlled for theological reasons. The Islamic finance industry has long been marked by divergent interpretations of Sharia, or Islamic law.
The Islamic finance industry has grown rapidly as Muslims around the world seek investments that comply with their religious beliefs. A tripling of oil prices over the past five years has flooded the Islamic finance sector with petrodollars, accelerating that expansion. So what are the issues facing the industry now? Of special interest for this blog are questions about how religious principles and business practices interact. For example, is some Islamic banking too Islamic for its own good? Do some types of murabaha contracts actually violate sharia law?