Quote:
Originally Posted by Cowperson
I'll throw this second story into this thread . . . . . the hottest area of banking is Sharia compliant financing.
Islamic finance is becoming one of the hottest areas in banking and insurance in the world as the Muslim population grows and wealth increases.
Sharia-compliant products must meet three criteria: no explicit interest is paid; the transactions can't be in such areas such as gambling, alcohol, pork or pornography; and the transaction can't be deemed as a gambling contract, or one that assumes a high level of risk. Products tend to be for both Muslims and non-Muslims alike.
Assets in the sector have hit more than $250-billion (U.S.) worldwide while the number of Islamic financial institutions has jumped to more than 300 from just one in 1975, the British Treasury estimates.
It's prompted global financial companies such as Citibank NA, HSBC Holdings PLC, Barclays PLC and American International Group Inc. to start offering Islamic financing products. Governments are getting interested too: Britain said last month it's looking into issuing sharia-compliant bonds as London aims to become the world centre for Islamic finance.
http://www.reportonbusiness.com/serv...y/robNews/home
Cowperson |
I always like criteria number one. There are many implicit ways of getting around this point that essentially creates a synthetic interest equaling the same effect as a security with an expicit interest feature. The key is to find hard assets to include in the transactions. However I like point number three, there is a lot of evidence out there that with the popularization of hedge funds and commodity futures trading that this type of trading skews and actually disrupts the market. By limiting derivative trading to only those with covered positions or physical interest in the commodity being traded a lot of this undue volitiliy can be reduced.