By Daniel Downs
Bloomberg Faith in Finance series features a unique aspect of modern global finance. That is Islamic finance. As an alternative to conventional banking and investment, Islamic finance began in the 1970s and has continued to develop and expand. Malaysia claims to be its center, but other nations are competing for that status. Yemen is showcased in the Bloomberg series. Islamic finance has expanded into Europe. Islamic bankers have London, center of conventional finance, in its sights. What about New York City? The Arab Bank Association of North America list a number of Arab banks located in NYC and elsewhere in the United States. J.P. Morgan Chase, Citibank, Bank of America, Merrill Lynch, and Morgan Stanley are among investment banks offering Islamic finance. Moreover, the Obama administration employs Shariah-compliance attorney Samara Ali as an adviser on Islamic finance and investments.
Throughout the Bloomberg series the stability of Islamic banking is emphasized. While convention banking and financial are at the center of the Great Recession, Islamic finance has been growing at an impressive rate of 15 percent. This stability and growth is attributed to the following unique operating principles:
1. No interest charges (usury)
2. Direct investment in the real economy (real estate, infrastructure, business)
3. No investment in vice (gambling, tobacco, alcohol, weapons)
4. Honest Transparency
These moral principles are based on Shariah law. This too is repeated throughout the series.
Leaders in Islamic finance remind their Western critics that these same principles were once adhered to in Christian Europe and in colonial America. The same was the case among Jews.
It is true the Torah prohibits Jews charging interest to other Jews. But, when it comes to lending money to non-Jews, the Torah does encourage usury.
When considering the message and mission of both Christianity and Islam, the implementation of the blessings of Abraham and revealed law of God among all nations and peoples requires the end of usury.
As it related to Jesus command to disciple all nations and peoples, the gospel and the epistles assume the application of Torah law as it concerns structuring and regulating society. The same is true of Islam—Shariah law, or God’s law, structures and regulates society.
That is why Islamic banking poses a problem. The implementation of Shariah law among banking institutions is one very significant step toward making all nations an Islamic state. As seen in the Middle East, an Islamic state produces the same results as the medieval Roman Catholic state, Puritan Massachusetts Bay, secular states like China, Russia, Cuba, etc. It should be added that the only difference between American and the previously mentioned secularists is control of law and government. If they ever do reach that pinnacle, America will see how violently intolerant they actually are. Jews cannot be left out the problem either. The same result of institutionalizing ideology by law and force of government already exists in Israel although in limited scope.
Nevertheless, Shariah banking in non-Islamic states is a potential threat to whatever vestiges of classical liberal society and governance that still exist.
Christians, Jews, and moderate Muslims could view this as an opportunity to reform traditional banking to incorporate those principles that were once normative in past ages and are being proved to still work by contemporary Islamic banking. At the same time, we can all benefit by ensuring that the convergent Quranic and Biblical principles become and remain operational principles rather than Shariah, Mishnaic, or Cannon law. Convincing consumers, government, and the finance industry to do so would also fulfill Jesus command in the sphere of banking and finance.