The Islamic Post Blog

Vatican Suggests Islamic Finance System to Western Banks by Khalida

The Vatican recently claimed banks should look at the ethical rules of Islamic finance to restore confidence amongst their clients during this time of global economic crisis.
“The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the Vatican’s official newspaper L’Osservatore Romano said.
Author Loretta Napoleoni and Abaxbank Spa fixed income strategist, Claudia Segre, say in the article that “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral.” Sukuk may be used to fund the “car industry or the next Olympic Games in London,” they said. They also said that profit share, gained from sukuk, may be an alternative to interest. They underlined that sukuk system could help automotive sector and support investments in the area of infrastructure. The Islamic sukuk system is similar to bonds of the western system; however, money is invested in concrete projects and profit share is distributed to clients instead of interest earned.
L’Osservatore Romano’s editor, Giovanni Maria Vian, said that “the great religions have always had a common attention to the human dimension of the economy,” Corriere della Sera reported.
Source: Brussels Journal.
Staff Writer Jamaal A. Waahid contributed to this report.


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