NEWHORIZON

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BOOK REVIEW <strong>NEWHORIZON</strong> October–December 2010 although it is no longer named as such. Karim tells us that in the Islamic moral economy’s market place, Allah or God is always the other omniscient and necessary partner in all transactions. According to Karim, He ‘...sets the prices.’ He does more than that. He sees all and knows all. He is the eternal policeman of our deeds and intentions. He abjures monopolies and unfair dealings, which imply asymmetrical knowledge, which in turn gives unfair advantage to one party against another. Risk and reward should be shared equally between all parties to a commercial transaction according to the rules of the Shari’ah. Omniscient and omnipotent immortality clearly has its drawbacks for venal mortals busy gaining advantage in the marketplace. In fact, after reading Karim’s critique, one wonders whether the principles of Shari’ah finance could ever be completely realised, given the vagaries of human nature in the marketplace and the perennial greed and desire to accumulate that drives most of us. Karim worries not only about the applicability of the obvious rules governing Shari’ah financial transactions, he also complains about the lack of ‘...a critical and holistic examination of conventional money, banking, and insurance models that may or may not be soluble [sic] with the utopian Islamic moral economy.’ He calls for a new Shari’ah perspective which is independent of ‘...conventional money, banking, or insurance.’ As it is, Shari’ah finance as presently practised and developed (it is a developing art, in fact it demonstrates the flexibility of fiqh, which is time-bound, but based on the eternal ethical principles of the Shari’ah) is new and in spite of the existence of a repertoire of Shari’ah finance contracts, which Karim analyses with varying degrees of clarity, it is limited in scope. As presently constituted it is unable to address the everexpanding and increasingly sophisticated plethora of financial products that constitute the Leviathan – some may call it a many-headed Hydra – that is the 24/7 casino of contemporary finance. Recently, Moody’s Investor Service reported that the global Islamic financial market is calculated to be worth between $750bn and $1 trillion USD and may expand to $2.8 trillion by 2015 according to an estimate by the Kuala Lumpur-based Islamic Financial Services Board. Whilst Islamic finance is moving fast into the mainstream of global finance, when you compare those figures with one asset class of conventional finance – that of FX trading, – which runs at around $3,981bn a day, you get a sense of the relative stature of Islamic finance in the global market. It is interesting to note also that most FX trading, which is a high-speed, algorithmic business, has little to do with either trade or investment, but is a market for speculators with an instinct for gambling. It would never pass muster by the Shari’ah even as a tolerant practice, never mind being compliant or dependent. Karim discusses many issues that cannot be covered in a short review of his book, he calls into question the compatibility of money creation by banks (by way of the pervasive use of the fractional reserve models in conventional banking) and by government with Shari’ah compliance; he points out the differing stances taken by various Shari’ah scholars and schools of thought on many points of law. Opinion is divided, authority questioned, precedents are sometimes vague and unreliable. Karim covers much ground in a concise space. The book’s short text of 93 pages has a long tail of a bibliography that runs to 24 pages. It appears that Karim has thrown in everything including the kitchen sink and one wonders who will be served by such a vast compendium of books. However, the body is well worth reading and pondering upon without the distraction of the tail. 40 IIBI www.newhorizon-islamicbanking.com
<strong>NEWHORIZON</strong> Shawwal-dhu al Hijjah 1431 DIRECTORY Directory Shaping the Future of the Global Islamic Finance Industry Since 1993 Volaw Trust & Corporate Services Limited www.volaw.com Mega’s exclusive focus on Islamic finance has enabled it to create significant value for the leading players in the Islamic banking, finance and investment markets. The portfolio of Mega brands represents the landmark industry conferences including the World Islamic Banking Conference (WIBC). Our clients are the leading players in the international finance markets and our strategic partners are world leaders in their respective fields. Andrew Chopra, Delegate Sales Manager Tel: +971 4 343 1200 Email: andrew@megaevents.net PO Box 72045, Dubai, UAE Volaw specialises in the formation of trusts, foundations, companies, limited partnerships and other fiduciary vehicles, and in providing offshore management and administration services to such structures established for corporate, institutional and private clients. Volaw is regulated by the Jersey Financial Services Commission. With over 25 years experience of working with leading Islamic finance institutions, Volaw has built a reputation for creating and managing innovative structures for Shari’ahcompliant and conventional funds and structured finance transactions, including Sukuk. Trevor Norman, Director Tel: +44 (0) 153 4500 400 Fax: +44 (0) 153 4500 450 Email: TNorman@volaw.com Templar House, Don Road, St Helier, Jersey, JE1 2TR Mondo Visione Ltd. www.mondovisione.com/ Mondo Visione is a publisher of information about exchanges and trading venues. Mondo Visione publishes the industry-standard Handbook of World Stock, Derivative and Commodity Exchanges, which provides trading, settlement and organisational information for around 250 exchanges in over 100 countries. The handbook is produced annually and is available in hardcopy and online. The company also organises the annual Mondo Visione Exchange Forum where market professionals can share ideas and experience with their peers, regulators, system providers, academics and journalists. For these and our other products please visit our web-site. Herbie Skeete, Managing Director Tel: +44 (0) 207 404 1940 – E-mail: herbie.skeete@mondovisione.com Mondo Visione, 1st Floor, Baird House, 15–17 St. Cross Street, London, EC1N 8UW, UK Path Solutions www.path-solutions.com Path Solutions is a worldwide provider of Islamic and Investment software solutions for the global finance industry and in specific the Islamic finance industry. It is the 1st and only banking software firm to be recognised and certified by the Accounting and Auditing Organisation for Islamic Financial Institutions. Path offers a wide range of Islamic, AAOIFI-certified and IAScompliant integrated software covering Core Banking, Investment and Private Equity, Treasury, Funds Management, etc. Path Solutions is headquartered in Kuwait, with offices in Beirut, Manama, Karachi, London, Kuala Lumpur and Riyadh. Agnes Carrasco, Administration Manager Tel: +965 2482 4600 Email: Acarrasco@path-solutions.com Kuwait Red Crescent bldg, 3rd floor, Al Jahra Street Shuwaikh. P.O.Box 592 Safat 13006 Dow Jones Indexes www.djindexes.com Dow Jones Indexes (www.djindexes.com) is a leading full-service index provider that develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best-known for the Dow Jones Industrial Average, Dow Jones Indexes offers more than 130,000 equity indexes as well as fixed-income and alternative indexes, including measures of hedge funds, commodities and real estate. Dow Jones Indexes employs clear, unbiased and systematic methodologies that are fully integrated within index families. Dow Jones Indexes is part of CME Group Index Services LLC, a joint venture company which is owned 90 percent by CME Group Inc. (www.cmegroup.com) and 10 percent by Dow Jones & Company (www.dowjones.com), a News Corporation company (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV; www.newscorp.com). Jon Winslade Director, European Business Development +44 (0)20 7796 7138 jon.winslade@dowjones.com Watling House, 33 Cannon Street, London EC4M 5SB, United Kingdom To advertise here, please contact: Cambridge Corporate Management Ltd Ickenham Manor Ickenham Uxbridge UB10 8QT Tel: + 44 (0)1895 625555 Email: newhorizon@cambcorp.co.uk www.newhorizon-islamicbanking.com IIBI 41
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