Sunday, May 19, 2013

Libya's ban on interest hits consumers as banks stop lending

Libya’s ban on interest has caused banks to cease lending to consumers outside of car loans, leading to informal tawarruq where car loans are taken out and the car is sold for cash. This is unsustainable and the government should replace its current rules with a transparent timeline that allows banks to continue to use interest-based products now with a scheduled reduction leading up to a date at which all banking is done through Islamic banking.

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