In an interesting opinion piece (with a discussion over at washingtonpost.com), a professor at Durham University in the U.K., Rodney Wilson, contemplates whether Islamic banking should be embraced as a positive development in banking or shunned as a tool for 'financial ghettoization'. Along the way to explaining why he believes it is provides a net benefit to the community, he writes:
Ultimately Islamic banking and finance is about the emergence of a distinctively Islamic form of capitalism that may co-exist and interact with Western, Chinese, Russian or any other capitalism. Such a development should be welcomed and facilitated, and not hindered or suppressed.
While Professor Wilson's argument largely makes sense in terms of injecting a new ethical constraint into mainstream banking, I find one aspect of his argument a bit troubling.
Professor Wilson believes that the effective privatization of Shari'ah boards (i.e. a system where the Shari'ah scholars are employed by Islamic financial institutions individually) contributes to the development of the industry (as opposed to government-controlled Shari'ah boards). I don't believe this is necessarily a net positive. While it is undeniable that countries like Sudan, Iran and, until recently, Pakistan that employed a top-down approach had a less developed Islamic banking system, the appearance of conflicts of interest in the 'privatized' Shari'ah board model harms the appeal of Islamic banks. At the same time, Kuwait has a Shari'ah arbitration group that was created by the government that decides Shari'ah-compliance where the scholars disagree and has around 30 Islamic financial institutions.
Pakistan to promote Islamic finance
The governor of the State Bank of Pakistan, Dr. Shamshad Akhtar (also the Deputy Governor of the Islamic Financial Standards Board (IFSB) for 2007, said the government was ready to promote the further development of Islamic finance in the country. She was speaking at the International Islamic Finance Conference in Karachi. A summary of the conference is available from albawaba.com.
Bank Negara Malaysia to host Global Islamic Finance Forum (GIFF) in March
Bank Negara Malaysia, the Malaysian central bank, announced that it will hold the Global Islamic Finance Forum from March 26 - 29, 2007 in Kuala Lumpur, Malaysia. The forum will be made up of four concurrently occuring forums, the Investors & Issuers Forum (March 27-28), the Financial Regulators Forum in Islamic Finance (March 26-29), the Banking and Financial Law School (March 27) and the IFSB Annual Meetings & Events 2007 (March 24-29).
The conferences will be added shortly to the Institute of Halal Investing's listing of Islamic finance conferences
Japanese Islamic Finance Conference
A summary is available from the IFSB.
Miscellany
AmInvestment received an award from Islamic Finance News for its recent REIT and Mudaraba.
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