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Islamic finance is one of the fastest-growing segments of today’s banking industry. Formerly deemed a marginal industry by some, Islamic finance is now recognized as a vital and thriving market.
While the size of Islamic finance banking activities, estimated to range from $500bn to $1,000bn, is still a fraction of conventional banking, the impressive growth rates of an average of 15% seen in recent years emphasize the potential market for such activities.
The rise of Islamic finance has caught the attention of Western countries. The United Kingdom has taken the lead, gathering more than $20 billion of Islamic Investments. But other countries are now moving towards Islamic finance.
France is adapting its legal and financial system in order to welcome Islamic funds, other countries such as the Netherlands and Germany are starting discussions, and even the USA could find an interest to add this new tool to its legislation.
As the traditional view of seeing Islamic finance as a mere Shari’ah- compliant packaging, the recent difficulties of the Western financial system have brought an about-turn. The global financial crisis that has devastated the international banking sector and sent stock markets in turmoil has accelerated the demand for alternative investments like Islamic finance.
Suddenly, Western economies are looking to Islamic finance, not so much for inspiration, but for remedial capital to help alleviate their economic tension. France, with Europe’s largest Muslim population-about six million- seems a natural country in which to attract and grow Islamic finance.
In fact, you could ask why it has been so slow to exploit it so far. Taking its cause further, France has enlisted Malaysia’s partnership, drawing on its years of experience as an Islamic finance hub. Executives of both countries’ central banks met to discuss how to take Paris’s initiative forward and redirect some of the bright light form London as an Islamic banking centre.
Beyond the clear objective of adding more financial resources to the ailing economy, Islamic Finance also provides ethical values that can have an interest even for non-Muslim parties. In the context of trading, the principles of Murabahah can be appealing, and for project financing, the profit-sharing philosophy of Mudharabah has a universal attractiveness. |
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