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Vatican Support for Islamic Banking I


slamic, Shariah- compliant banking is becoming a global worldly accepted form of managing wealth. Pope Ben- edict has also expressed his praise and admiration for the ethical principles ofprovided by Islamic bBanking.


“Pope Benedict has reportedly urged the western commu- nity to look at the Islamic banking model, due to its ethical approach, andin order to restore confidence amongst their clients in a time of the economic global crisis”. This news came out in no less an authoritative an outlet than the Vati- can’s official newspaper, L’oOsservatore Romano.


In the 5th March 2009 issue of the paper, authors Loretta Napoleoni, and Abaxbank Spa fixed income strategist, Clau- dia Segre, said that: “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.” They suggested that “Western banks could use tools such as the Islamic bonds, known as Sukuk, as collateral,”, add- ing that Sukuk may be used to fund “the “car industry or the next Olympic Games in London.”


Justifying the similarity of opinions between Islam and Christianity regarding global finance, the newspaper’s edi- tor, Giovanni Maria Vian, said that “the great religions have always had a common attention to the human dimension of the economy.”


Islamic banking is becoming a globally recognised form of managing wealth in a Shariah- compliant manner - and both non- Muslims and Muslims alike are choosing the option, not only in order to follow the principles of Islam, but also


74 Global Islamic Finance February 2011


due to its many other benefits. The sSectors of Sukuk (Is- lamic bonds) and Takaful (Islamic insurance) are increas- ingly attracting an increasingly global market, which contrib- utes to the growth of the Islamic financial industry.


The Islamic banking sector is estimated to grow in worth to over US $2 trillion dollars by 2012, as many countries continue to look for a slice of the pie by tapping into the lucrative sector for a slice of the pie.


Conventional banking has often been seen to have its draw backs, including of high interest rates and investors falling heavily into debt through interest - which was the main rea- son for the current global financial crisis. However, the Sha- riah law prohibits the use of interest, which makes it a more of an attractive option.


Islamic Banking has gainedseen acceptance not only from the Vatican, but also from many other Western govern- ments. Both as France and Luxembourg have expressed a desire want to tap into the Islamic banking sector, and have attempted to provide accommodate the necessary legisla- tion to accommodate Islamic banking in order to make it a reality.


With the support from Western governments and from the Vatican it shows that Islamic banking has a good deal of room for scopegrowth, and With proper standardisation of the industry, the sector can’t fail only to grow to its full po- tential, and tap into athe global market.


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