The Pulse of Ethical Business

November | December 2016








Abdelilah Belatik




Hazik Mohamed



Paul McNamara











A Bright New Dawn For Islamic Finance Today: Muhammed Ikram Thowfeek

Measuring the Industry Pulse: Abdelilah Belatik

Islamic Finance Performance by Region: Shereen Mohamed

Sustainable Development Goals: Jamshaid Anwar Chattha

Internet of Things & Islamic Financial Services: Nida Khan

The Blockchain and Islamic Finance: Hazik Mohamed

Brave New World & Role of Islamic Finance: Muath Mubarak

The Synergy of SMEs and FinTech: Nur Shaira & Nur SaSakinah

Digital platforms: the future of employment: Paul McNamara

Millennials & Islamic Finance: Blake Goud

Talent is universal: Charles Selestine

Effect of Currency Inflation: Abdulazeem Abozaid

Crypto Currencies: Sheikh Shafiq Jakhura

Socio-economics of 'Islamic money’: Valentino Cattelan
















Transmitting Ideas

Spurring Growth

As always we at Islamic Finance Today are committed

to transmitting the ideas of industry leaders and

scholars to our wide readership for broader application

and a better understanding of emerging thoughts and


In this special edition of Islamic Finance Today we

commence our long list of contributors with a report by

the Secretary General of the General Council for

Islamic Banks and Financial Institutions (CIBAFI),

Mr.Abdelilah Belatik who sums up the findings of their

Global Islamic Bankers' Survey which concludes that

Islamic banks are 'fairly' optimistic about the future

prospects for Islamic banking and their ability to

outperform their conventional peers in terms of revenue

growth. Good news indeed.

He is followed by Thomson Reuters' Shereen

Mohamed's article on the Performance of Islamic

Finance by Region where she shows the satisfactory

growth of the industry across 60 countries and 8 regions

globally. We also have well known Financial Analyst

Jamshaid Anwar Chattha who convincingly shows that

Islamic finance offers basic principles closely in line

with the concept of Sustainable Development adopted

by the UN.

Among other contributions to this issue are those to do

with the latest developments in Financial Technology

such as Hazik Mohamed's Blockchain and Islamic

Finance where he argues that blockchain technology

will allow Islamic Finance to adapt to the changing

landscape of modern economic transactions instead of

playing catch-up by replicating soon-to-be outdated

conventional practices.

Nida Khan's Internet of Things makes a strong case for

Islamic Finance to embrace and develop with one of the

greatest technological and social shifts of our times

while Muath Mubarak's Brave New World focuses on

innovation as the way forward for IFI's. We also have

Paul Mc.Namara making a case for Worker-owned

digital platforms which he believes could be the best

way of putting the future of employment within the

Islamic financesphere back in the hands of workers

themselves and Blake Goud who stresses on how best

millennials could be attracted to Islamic Finance.

Besides these analytical articles, we also have some

thought-provoking papers including Abdulazeem

Abozaid's Effect of Currency Inflation on Debt

Repayment where he gives an Islamic perspective of the

problem, arguing that since Sharia calls for fair closure

of transactions, compensating for inflation remains far

from riba since it relates to the realization of justice and

removal of harm; the very reason for riba prohibition.

The paper on Crypto Currencies by renowned Islamic

Scholar Sheikh Shafiq Jakhura is also timely. Here the

author expresses his doubts on the religious

permissibility of crypto currency. And finally we round

up our collection of articles on a philosophical note with

Valentino Cattelan's Aristotle and the Socio-Economics

of Islamic Money where he speaks of the functional

nature of money as 'food for goods' to facilitate the 'life

of people' and dwells on the ability of Islamic finance to

actually re-orient the market towards social inclusion

and redistribution of wealth.

Happy reading!

Asiff Hussein


Islamic Finance Today

Editor in Chief - Asiff Hussein

Layout & Design - Nimry Marikkar

Marketing - Anfas Anees

PR & Circulation - Fazna Fazmi

No 4, Collingwood Place, Colombo 06, Sri Lanka.

Phone: +94 11 7395090-3 | Website:

Islamic Finance Today is a monthly magazine exclusively

dedicated to Islamic Finance & Banking published by Pioneer

Publications (Pvt) Ltd. It contains a variety of interesting articles

including exclusive interviews, news and views on various

aspects of the industry.

No part of this publication may be reproduced in any form

without the prior written permission of the publisher. Views

expressed in this publication are not necessarily those of the



A Bright New Dawn

For Islamic Finance Today

By Muhammed Ikram Thowfeek

Islamic Finance Today is changing to meet the

needs of a brave new Islamic finance industry

operating in a bright new world - Muhammed Ikram


The world is changing.

The financial landscape is changing.

The Islamic financial landscape is changing with it.

And now Islamic Finance Today is changing too - to

meet the altered reality of doing business today.

When Islamic Finance Today was first published

back in (2006), our vision was for a publication that

met the demands of our busy reader and we

succeeded. Some readers were chairmen and CEOs,

others were in IT, some were recent graduates and

some were old hands.

Throughout the past 10 years (2006-2016), with a

gap of 2 years, we have faithfully served the Islamic

finance industry, providing our regular mix of

insight and foresight, comment, analysis, news and


We intend to cover the industry in the same spirited

fashion, but we also recognise that our readers want

to consume their information in a way that is more

convenient for them.

Digital devices have become a core part of all of our

lives – and we recognise that many of our readers

would like to consume Islamic Finance Today on

their mobile devices, be it a smart ‘phone or a tablet

device or both.

To make this possible, in 2017, we have developed

a state-of-the-art App for Islamic Finance Today

that will run on most handheld devices and will put

the power of information back in the hands of our

readers. The App has been designed to offer readers

the best user experience possible.

However, do not think that this is simply about

replicating the content of the Islamic Finance Today

monthly magazine in a new digital format. It is

about much, much more than that.

We have taken a leaf out of the book of some of the

world’s leading media companies and developed a

new look publication that will deliver rich content

across text, video and audio seamlessly: all of it

with a very specific focus on developments in

Islamic finance.

This means developing communities at all levels –

from students to central bank governors, auditors to

bankers, Takaful agents to Shari’ah board members

and much more besides.

The team at Islamic Finance Today has been active

in the industry for many years and the result of this

is that we know many of the major players active in

the industry. Our goal is to tap that well of knowledge

in order to produce a steady stream of

comment and insight that will act as the central

fount of knowledge about what is happening in this

remarkable industry.

We also want to encourage healthy debate, discussion

and understanding of the latest issues facing

the Islamic banking sector. Moreover, there has

never been more need for this kind of informed

interaction between leading industry players.

A change is gonna come.

“We have faithfully served the

Islamic finance industry,

providing our regular mix of

insight and foresight, comment,

analysis, news and opinion.”

Islamic Finance Today - November | December 2016

IFT 07


At Islamic Finance Today, we believe that we are on

the cusp of enormous change. The kind of change

that we have already seen in digital platforms like

Uber and Airbnb is already affecting the financial

services landscape and we believe that it is only a

matter for time before these same seismic shifts

unsettle the Islamic finance landscape.

Will the industry be ready to meet this change? We

think that there are few Islamic banks capable of

coping with this disruption in isolation. We think

that the best hope that we have in adapting to the

coming change and thriving in the new environment

is through the collaborative use of information.

We need to talk with each other more. We need to

interact. We need to learn from each other.

The new look Islamic Finance Today is designed to

be the platform that will allow this interaction free

expression. Islamic Finance Today is the place

where the debate will happen first. It is the place

where today’s leaders will trade ideas with tomorrow’s

leaders. Discussions will be started that will

define the future course of the industry.

Does that sound rather grand? We hope not. We

hope it sounds realistic – because the change that is

coming should be viewed with great optimism – not

great trepidation.

The arrival of digital platform economics in the

Islamic finance realm is the greatest possible opportunity

for the industry to undertake that growth

spurt that is has been promising to take for decades


It is precisely this collaborative interchange of

strategic learning that will be facilitated by the new

Islamic Finance Today.

We would like you to be a part of the process. We

would like you, our loyal readership base, to

become advocates for the new Islamic Finance

Today platform, to become active members,

readers, contributors and winners.

Share your thoughts and insights with us. Tell your

friends and colleagues in the various social networking

groups you belong to and help us to progress

the debate and grow the community.

We know that we are taking up a big challenge and

we know that we cannot do it alone. No one could.

So we invite you to become part of the drive for a

better, more informed Islamic finance space.

You can start by downloading the Islamic Finance

Today App from January 2017 and telling your

peers. We are only just at the start of the journey. It

will be a long one. But it will be invigorating and

you really cannot afford to miss out.

“We need to talk with each other

more. We need to interact. We

need to learn from each other.”

We believe that the only realistic way to create a

win-win future – by which we mean a future where

Islamic finance houses win at the same time that

customers win – is by the collaborative interchange

of strategic learning.

08 IFT

Islamic Finance Today November | December 2016


Measuring the Industry Pulse:

Revelations from the Global Islamic Bankers' Survey 2016

By Abdelilah Belatik

Secretary General of the General Council for Islamic Banks and Financial Institutions (CIBAFI)

Notwithstanding unpredictable macro-economic and

geopolitical conditions in the Islamic finance industry's

core countries, the industry continues to progress at a

steady pace. At the same time, rapid changes in the

global economy mandate a reference point to measure

the impacts in the form of top concerns and various risks

faced by the Islamic industry.

The General Council for Islamic Banks and Financial

Institutions (CIBAFI’s) inaugural flagship publication

Global Islamic Bankers' Survey (GIBS) which was

launched last year, served as a new reference point for

analysing the health and development of the Islamic

banking industry. This year, CIBAFI's GIBS 2016 again

measures the pulse of the Islamic finance industry and

enables us to track changes in views and the aspirations

of Islamic bankers,

The GIBS 2016 finds out Islamic bankers' views on the

prospects for their industry and the risks they face. It

reveals that although Islamic bankers remain

moderately optimistic about the prospects for banking

in their home markets and for Islamic banking in

particular, they are less optimistic than last year.

They also believe that the risks that they face are

increasing. Sixteen out of the 22 risk categories that

were included in the survey were scored slightly higher

this year than last year. This year, like last year, GIBS

2016 gives focus to a specific issue that is important to

Islamic banks. This year, GIBS has an additional focus

on Responsible and Sustainable Finance.

GIBS 2016 reveals that Islamic banks are 'fairly'

optimistic about the future of banking in their home

markets, and for the prospects for Islamic banking;

however, they are a little less optimistic than they were

last year in both cases. Islamic bankers are fairly

optimistic that they will be able to outperform their

conventional peers in terms of revenue growth.

GIBS also measures responses on regional lines. It has

revealed that Islamic banks in the Middle East region

are more optimistic than their Asian counterparts on

prospects for banking.

One of the striking revelations is that there are moderate

views across all 7 regions (GCC; Ex GCC; South East

Asia; West, Central and South Asia; North Africa; Sub-

Saharan Africa; Europe Turkey and others) around the

globe – no banks declare themselves to be either 'very

optimistic' or 'very pessimistic'.

This year, GIBS additionally analysed responses on the

basis of 'large banks' (those with more than US$5

billion in assets) and 'small banks”' (those with fewer

than US$5 billion in assets). Apart from the survey,

GIBS 2016 is also based on interviews of selected

Islamic banks.

Islamic Banking Industry Optimism Level:

This is considered an increasingly important aspect as

Islamic bankers seek to differentiate themselves from

conventional business models. GIBS 2016 is based on

responses from 86 heads of Islamic banks from 29

countries around the world and includes an update of

the Confidence Index and Risk Dashboard that

measured industry's response last year, and responses to

questions about Islamic banks' activities in the field of

Responsible and Sustainable Finance.

“Islamic banks are 'fairly'

optimistic about the future of

banking in their home markets”

1. Extremely pessimistic; 2. Very pessimistic; 3. Fairly

optimistic; 4. Very optimistic; 5. Extremely optimistic

Islamic Finance Today - November | December 2016

IFT 10


On the top concerns for Islamic banks, macro-economic

environment is the biggest concern, followed by service

quality and challenges related to business growth and

expansion. Several main concerns relate to common

pressures faced by banks in developing and changing

business environments.

It is an indication of the increasing maturity of the

Islamic banking industry that banks are now heavily

focused on standard banking challenges rather than

exclusively on those that are specific to Shariacompliant


Islamic banks believe that the risks that they face are

increasing. Sixteen of the 22 risk areas identified in the

latest CIBAFI questionnaire are deemed to have a

higher risk than they did last year. Regardless of the

size, banks broadly face the same risk priorities. Macroeconomic

risk is seen as the greatest that Islamic banks

face, with liquidity risk ranked second and political risk

ranked third.

There are certain regional differences in primary risks

that Islamic banks consider they face, however, six out

of the seven regions rank macro-economic risk as

among the most important risks. Banks are confident of

their ability to comply with the Sharia principles and

rate the risk of non-compliance low.

GIBS 2016 results on Responsible and Sustainability

Business Practices offers findings and analysis that aim

to enhance the understanding of the degree of

responsible business and sustainability practices in the

global Islamic banking industry.

Specifically, it considers 11 areas that affect banks'

responsible business and sustainability practices:

1) business sector exposure

2) key stakeholders

3) economic impacts of Islamic banks

4) employee relations and development

5) customer relations

6) banking product responsibility and financial

consumer protection

7) financial inclusion, social impact and MSME


8) community relations and corporate philanthropy

9) environmental policy and management system

10) bank's integration of social and environmental

impacts into business strategy

11) constraints and benefits in implementing

responsible business initiatives, Corporate Social

Responsibility (CSR), or sustainability strategy.

GIBS 2016 tells us that most Islamic banks have

moderate to high exposure to three sectors: construction

and infrastructure, real estate and mortgages, and

trading companies and distributors.

Traditional stakeholders (investors, shareholders,

board of directors, employees, consumers,

governments and financial regulators) are viewed as

having the greatest impact on the way Islamic banks

contribute to the society, economy and environment.

Among initiatives that could contribute to local

economic development, Islamic banks consider

strengthening of SMEs and job creation by the banks,

banks' clients and banks' suppliers would make the

biggest contribution.

11 IFT

Islamic Finance Today November | December 2016


Over the next one to three years, Islamic banks say they

will give more focus to SME financing as well as

financing/investing in infrastructures that support

micro, small and medium enterprises (MSME).

Among the top challenges that Islamic banks face in

promoting high quality employee relations for superior

business performance are developing the ability of their

employees to innovate, effective career development

programmes, mentoring, succession plans, training, as

well as maintaining a high level of employee

engagement and satisfaction. While high employees'

competencies in Islamic finance is fairly challenging,

low employee turnover rate is the least challenging.

The survey findings show that there are two key

initiatives that have been developed by Islamic banks in

customer relations management:

a) improvement of the bank's Know Your Customer

(KYC) and other client screening mechanisms.

b) resilient client data information security and privacy.

In terms of banking product responsibility and financial

consumer protection, two key mechanisms developed

by the Islamic banking sector stand out:

a) service charges, profit rates, and the basis of

calculations being transparent to customers.

b) screening of documents (i.e. forms, etc.) by a Shariah

supervisory board or its agent to avoid imposition of

burdensome terms and conditions to clients.

On community relations and corporate philanthropy,

the top three philanthropic and social programmes are:

a) education

b) empowerment for poor and needy individuals and


c) support for and sponsorship of conferences and


Most of the environment-friendly business practices of

Islamic banks are in the range of low to moderate

development, with:

a) internal environmental and energy management


b) environment friendly policy or procedures across all

operations of the bank being more developed in relation

to other practices

“Islamic banks say they will

give more focus to SME

financing as well as

financing/investing in

infrastructures that support

micro, small and medium


GIBS findings also suggest Islamic banks will focus on:

a) improvement of employees' responsible business

practices on both social and environment factors

(awareness, training, and compensation)

b) alignment of social and environmental impacts with

the overall business strategy of the bank

c) integration of social risk assessment in financing

/investment criteria.

GIBS also revealed that most large banks cite absence

of monitoring social and environmental risks by them

and their clients, high cost for implementing

responsible business, as well as complexity in

implementing an “integrated, bank-wide approach” as

constraints in implementing responsible business

initiatives, corporate social responsibility (CSR) and

sustainability strategy.

Both large and small banks also view the absence of

social and environmental regulations as well as the lack

of consumer demand for responsible business products

and services as significant constraints.

In addition, GIBS provides a detailed account of eight

areas where Islamic banks could enhance their work to

promote Responsible and Sustainable practices. Both

the survey and interviews have been designed taking

into account these eight themes.

It is envisaged that GIBS 2016 will once again be

considered as a landmark report that will tread the

future course of the Islamic banking industry and guide

its stakeholders in taking strategic decisions for the

growth and development of the industry.

Islamic Finance Today - November | December 2016

IFT 12

13 IFT

Islamic Finance Today November | December 2016


Islamic Finance

Performance by Region

By Shereen Mohamed

Shereen is currently a financial analyst with content and research background specializing in Islamic

Finance. She is committed with Thomson Reuters Islamic Finance research team in producing quality

market analysis and tailored content to a growing global audience.

The global Islamic finance industry total assets grew

8% to US$ 2 trillion milestone in 2015. It is supported

by the growth of five Islamic finance sectors which are

Islamic banking, takaful other types of Islamic financial

institutions, sukuk and Islamic funds across 60

countries and 8 regions globally.

In this article, we discuss the performance and

contribution of each region towards this industry based

on the 2016 edition of ICD-Thomson Reuters Islamic

Finance Development Indicator (IFDI) report.


GCC has the largest Islamic finance assets globally

totalling to US$ 922 billion in 2015 (or 46%); almost

twice Islamic finance assets in Southeast Asia or Other

MENA. If GCC continued the same pace of growth in

2016, it could surpass US$ 1 trillion of Islamic finance

assets driven by its Islamic banking system which

currently constitutes 81% of total GCC's Islamic

finance assets.

Saudi Arabia is the largest Islamic finance assets

jurisdiction in GCC and globally (US$ 447 billion)

supported by its strong Islamic banking system

composed of fully fledged Islamic banks and Islamic

banking windows. It is followed by the UAE (US$ 187

billion), Qatar (US$ 101 billion), Kuwait (US$ 100

billion), Bahrain (US$ 81 billion) and the latest joiner

and fastest growing in Islamic finance assets, Oman

(US$ 7 billion).

The performance of GCC Islamic financial institutions

had been impacted negatively by the decline in oil

prices; however their total assets grew 9% from 2014 to

2015. The economic downturn as a result of such drop

in prices means that sukuk could emerge as a tool of

choice to plug some countries' budget deficits.

Some of them already have started using it in 2016 such

as Qatar (US$ 1.15 billion), Oman (US$ 500 million),

Bahrain (US$ 1 billion) and Emirates of Sharjah (US$

500 million).

Other countries are also planning sovereign sukuk

issuances. Kuwait's Capital Markets Authority

introduced sukuk rules in November 2015 in a move to

prepare for its sovereign issuance.

Meanwhile, Saudi Arabia's previous minister of

finance, Ibrahim Al Assaf, hinted that the Saudi

government is planning to issue sukuk in future after the

successful issuance of mammoth bond offering in

October 2016.

Other MENA:

Other MENA includes MENA countries excluding the

GCC. It includes Iran, Egypt, Sudan, Jordan, Yemen,

Iraq, Algeria, Syria, Palestine, Tunisia, Lebanon,

Mauritania and Morocco.

Other MENA is the second largest region with a total of

US$ 481 billion in 2015. Iran holds 90% of other

MENA's assets driven mainly by Islamic banks. In

January 2016, Iran UN sanctions were lifted which will

allow its Islamic finance and oil industry to enter back

into the global economy.

For that, it is expected that its Islamic finance industry,

especially Islamic banks, will enter the global economy

with caution as its financial system needs to strengthen

its weaker aspects such as liquidity and Basel III


It is also expected that such entrance will occur after a

few years as European banks are hesitant to deal with

Iranian banks while U.S. banks are restricted by the

ongoing domestic sanctions imposed on them.

North Africa region is poised to expand on its local

Islamic finance industry as well. This is supported by

the willingness by GCC banks to establish Islamic

banking subsidies in Morocco such as Al Baraka,

Emirates NDB and Masraf Al Rayan.

In addition, French banks' subsidiaries are aiming to sell

Islamic financial products in Morocco as well.

Islamic Finance Today - November | December 2016

IFT 14


Southeast Asia:

Southeast Asia has the third largest total Islamic finance

assets standing at US$ 473 billion at the end of 2015.

The region's biggest contributor to Islamic finance is

sukuk which mainly comes from Malaysia (US$ 189

billion) followed by Indonesia (US$ 25 billion),

Singapore (US$ 1.5 billion) and Brunei (US$ 309


The second largest contributor is Islamic banking which

totalled to US$ 188 billion in 2015. For Indonesia, the

introduction of the five year roadmap in 2015 is

expected to increase the Islamic banking contribution,

competiveness and stability towards its economy. In

addition, the new foreign policy ownership for Islamic

banking sector may attract new foreign institutions in

the Indonesian market.

Dubai Islamic Bank, Abu Dhabi Islamic Bank and Al

Baraka have expressed their willingness to enter this

market. Its takaful sector is expected to strengthen as

well as a result of new regulatory requirement to spin off

takaful windows, hence mergers and acquisitions are on

the horizon.

“Malaysia is the biggest driver

for Southeast Asia”

Meanwhile, Malaysia is the biggest driver for Southeast

Asia's Islamic finance industry as it is the third largest

country in terms of Islamic finance assets globally and

the most developed country according to the ICD-

Thomson Reuters Islamic Finance Development

Indicator report findings.

In July 2013, the regulators introduced the Islamic

Financial Services Act (IFSA 2013), replacing the old

Islamic Banking Act 1983 and Takaful Act 1984. It is

expected that this landmark act will dully observe the

Sharia and operational compliance guidelines for

Malaysia's Islamic financial institutions.

It also introduced Sharia compliant Employee

Provident Fund (EPF), Malaysia's retirement saving

fund, and it is expected to allocate US$ 7.43 billion to

this fund in 2018

South Asia:

South Asian countries total Islamic finance assets grew

an average of 16% per year from 2012 till 2015 totalling

to US$ 49 billion. This figure is mostly attributed to

assets from the region's Islamic banking sector with

total Islamic banking assets of US$ 41 billion coming

mostly from Bangladesh and Pakistan (US$ 26 billion

and US$ 22 billion respectively).

15 IFT

Islamic Finance Today November | December 2016


Other Islamic financial institutions also play a role (US$

3 billion) in all South Asian nations especially in

Pakistan (US$ 2.6 billion) which has mudaraba


Pakistan has the world's second largest Muslim

population and its government has made strides to

promote this industry in the country. The latest is the

establishment of the Islamic Finance Department and

Sharia board in its Securities Exchange and

Commission (SECP), issuance of sukuk rules, and the

allowance of takaful windows operated by insurance


Meanwhile, India is showing a superior 160% growth in

its Islamic funds sector, putting it among the top ten

nations in the field of Islamic funds industry growth in

addition to it being one of the world’s most promising

growth economies. The Islamic funds sector is not new

to the country as it already has Taurus and Tata equity

funds with the latter being launched in 1996. On the

other hand, the opportunity for dealing with an Indian

Islamic bank or investing in an Indian sukuk is unlikely

as the country still lags in developing both.

Other Asia:

Other Asia includes Hong Kong, Kazakhstan,

Kyrgyzstan, Japan, Azerbaijan and Australia. In terms

of assets growth, other Asian nations' assets grew the

most between 2012 and 2015 with an average annual

growth of 80%.

This is mainly attributed to Hong Kong's sovereign

sukuk issuance in 2014 and 2015 that boosted these

Asian nations Islamic finance assets by US$ 2 billion.

The CIS nations of Kazakhstan, Kyrgyzstan and

Azerbaijan have existing total Islamic finance assets of

US$ 179 million in 2015 and such total is projected to

grow further as another CIS nation, Tajikistan, took a

serious step towards Islamic finance when it introduced

its Islamic banking law in August 2014.

Sub-Saharan Africa:

Sub-Saharan nations are also showing a promising

future for this industry as its assets grew on average of

13% annually over the past four years and also

witnessed several new initiatives especially in the area

of sukuk. It is the second largest asset class in terms of

assets in the region (US$ 1.035 billion in 2015)

contributed by 5 nations. Togo is the latest West African

sovereign joiner in 2016 when it issued US$ 251 million

worth of sukuk in July.

It is expected that Kenya and Nigeria will issue

sovereign sukuk of their own as well as to fund their

infrastructure needs. As for Islamic banking, the

parliament of the East African nation, Uganda, amended

its laws to allow Islamic financial products in January

2016 and Nigeria’s central bank set up guidelines for its

Islamic finance advisory body to oversee its Islamic

banking sector in February 2015. Cameroon's first

Islamic window was launched the same period by

Afriland First Bank.

Europe and Americas:

2016 is marked with UK's split from the European

Union or what is dubbed as 'Brexit' after its leave voters

overtook stay voters by a margin of 4%. It is believed

that such a move will implicate the nation's US$ 5

billion Islamic finance industry which contributes to 7%

of Europe's total Islamic finance assets. The implication

could be in terms of a more attractive investment

opportunity especially in the area of real estate which

could be boosted due to lower pound/dollar exchange

rate and this benefits the US dollar pegged economies

such as GCC.

Also, there is continuous talk about it and Luxembourg's

(US$ 2.5 billion in Islamic finance assets) being the

European hub for this industry. Luxembourg is known

to be the leading non-Muslim majority domicile for

Islamic funds and it issued its first sovereign sukuk in


Despite this, it is Turkey, the connecting nation between

Asia and Europe, which contributed the most to this

region's Islamic finance assets (US$ 51 billion) due to its

strong Islamic banking presence which takes 81% of

Turkey's Islamic finance assets.

The country is also expanding its Islamic banking

business into other European nations when Kuveyt Turk

opened KT Bank AG in Frankfurt, Germany.

Unfortunately, the latest failed military coup event in

Turkey led its banking watchdog (BDDK) to cancel the

operating rights of Bank Asya, one of Turkey's largest

Islamic lenders and founded by the followers of one of

the accused in the failed military coup, Fethullah Gulen.

North and South America contributed small portions of

Islamic finance assets. North America's strongholds,

U.S. (US$ 3 billion) and Canada (US$ 212 million) have

Islamic funds totalling to US$ 3 billion. Heading south,

Suriname's Trust Bank announced it will convert to

become South America's first fully fledged Islamic bank

by end of 2016.

Islamic Finance Today - November | December 2016

IFT 16


& Sustainable Development Goals

By Jamshaid Anwar Chattha

Jamshaid Anwar Chattha is Chief Financial Analyst and Islamic Finance Expert at the Central Bank of Kuwait

17 IFT

Islamic Finance Today November | December 2016






The philosophies of profit maximization and

consumerism as a means for the pursuit of happiness

have failed people. The typical model of economic

development has resulted in the collapse of financial

markets on more than one occasion, and created a

number of externalities. Notably, the recent global

financial crisis has posed poignant challenges about the

stability and sustainability of the financial system.

Therefore, the recurring financial debacles coerce a dire

need for an economic model that addresses these global

challenges. In the process of exploring possible answers

to the challenges, what has remained less explored is the

fact that Islamic finance offers basic principles closely in

line with the concept of Sustainable Development

adopted by the UN.

To keep a long story short, the UN Sustainable

Development Goals (SDGs) is a new set of guidelines

for the world, which sets priorities and aspirations for

2030 and envisages a revitalised global partnership for

Sustainable Development (SD). As such, all efforts and

processes that contribute to its enhancement become the


Here we will endeavour to address how Islamic finance,

which comprises various sectors, can help in achieving

the Sustainable Development Goals of the UN.

Islamic Finance Perspective on Sustainable

Development – Natural Alliance

The principles of Islamic economy with its features of

social altruism offer a just and fair socioeconomic

system where there is a strong commitment towards the

well-being of human society. With its fusion of

economic and moral principles, Islam advocates a

sustainable model of development.

Right from the advent of Islam, the unfeigned

significance of the economy has been emphasized by

Prophet Muhammad (Peace Be Upon Him) whose first

profession was trade and commerce. In order to ensure a

broad-based sustainable economic growth, Islam put in

place certain mechanisms such as mandatory payment

of zakat and voluntary payment of sadaqat, creation of

waqf, prohibition of riba and gharar.

These measures in totality are sufficient for poverty

alleviation and creation of a sustainable society which

ultimately ensures SD.

SD is not a new concept to Muslim economists. Islamic

economics has medieval roots including an immense

literature from Muslim scholars such as Al-Ghazali and


In his work, Al-Ghazālī refers to the protection of five

purposes or essential elements to promote the wellbeing

of all mankind: religion (al-Deen), life (al-Nafs),

progeny (al-Nasl), intellect (al-Aql) and property (al-


Further, according to Ibn Khaldun's multidisciplinary

theory promulgated more than 600 years ago,

immorality, and injustice are indicators of unsustainable

development which caused the fall of nations. The

intellectual legacy of Ibn Khaldun is unique among the

works of Muslim thought, and very relevant in the

modern context. Ibn Khaldun's Muqaddimah was the

first work which promulgated the economic theories put

forward by Adam Smith in his Wealth of Nations.

There are over hundred verses in the Qur'an covering

economic justice, equality, and equal distribution of

wealth. For instance, the following Qur'anic verses

2:195, 7:31reflect the very basic concept of SD.

َ ِ َّ ۛ َ َ ْ ُ ۛ َّ ْ ُ ِ ِ َ ِ َ ُ ْ ُ ْ ُ َ َ ِ َ ِ ِ ِ َ َ ِ ُ

ُ ْ ِ ُ ِ ُّ

َّ إن ◌ وأح ‏ِسنوا ◌ َ التھلكة إلى بأ ‏ْی ‏ِدیكم تلقوا ولا َّ سبیل في وأنفقوا

المح ‏ِسنی ‏َن یحب

“Spend in the cause of Allah and do not contribute to your

destruction with your own hands, but do good, for Allah loves those

who do good.” (2:195)

ُ ْ ِ ِ ُ ِ ُّ َ ِ َّ ُ ْ ِ ُ َ َ َ ْ َ ُ َ ُ

…“Eat and drink: But waste not by excess, for Allah loves not the

wasters.” (7:31)

‏.…المسرفی ‏َن یحب لا إنھُ‏ ◌ تسرفوا ولا واشربوا وكلوا

Actually, sustainability and Islamic finance represents a

natural alliance. The basic Islamic finance principles

have a universal appeal which supports sociallyinclusive,

environmentally-friendly and developmentpromoting


Given its emphasis on justice and risk-sharing, direct

linkages between finance and the real economy,

partnership-based and equity-focused approaches, and

avoidance of excessive speculation and leverage,

“The principles of Islamic

economy with its features

of social altruism

offer a just and fair

socioeconomic system”

Islamic Finance Today - November | December 2016

IFT 18


Islamic finance emphasizes the full integration of

finance with the real economy and helps the financial

services sector to achieve greater stability and a

sustainable growth trajectory.

Greater reliance on the principles underlying Islamic

finance will improve financial sector stability, which in

turn will help in promoting resilience, increasing social

sustainability, and facilitating sustainable infrastructure


This is already being translated into reality as the world

is increasingly recognizing the importance of

investments that are socially responsible and

environmentally sustainable.

In December 2014, for example, the International

Finance Facility for Immunisation, for which the World

Bank acted as treasury manager, launched a $500

million Sukūk, the proceeds of which were used to

finance projects for the Global Alliance for Vaccines

and Immunisation.

SDGs being addressed by Islamic finance

Major areas to which Islamic finance can contribute are

ending poverty (SDG-1), achieving food security

(SDG-2), ensuring healthy lives (SDG-3), achieving

gender equality (SDG-5), economic growth (SGD-8)

and promoting peaceful & inclusive society (SDG-16).

Additionally, innovative Islamic financial instruments

especially for sustainable infrastructure development

such as Sukūk can be used to mobilize resources to

finance water and sanitation projects (SDG-6),

sustainable and affordable energy (SDG-7), build

resilient infrastructure (SDG-9) and shelter (SDG-11).

It is also important to note that the Islamic financial

sector broadly aligns with traditional Islamic

philanthropy programs such as zakat (alms), sadaqah

(charity) and wakf (donation) which have played a vital

role in social protection and alleviating poverty in a

dignified manner and have led to wider social and

financial inclusion. These are in line with, and, are able,

to support SDGs.

Figure 1: Sustainable Development Goals and Islamic Finance


UN Sustainable Development Goals

Goal 1. End poverty in all its forms everywhere

Goal 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Goal 3. Ensure healthy lives and promote well-being for all at all ages

Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

Goal 5. Achieve gender equality and empower all women and girls

Goal 6. Ensure availability and sustainable management of water and sanitation for all

Goal 7. Ensure access to affordable, reliable, sustainable and modern energy for all

Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment

and decent work for all

Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster


Goal 10. Reduce inequality within and among countries

Goal 11. Make cities and human settlements inclusive, safe, resilient and sustainable

Goal 12. Ensure sustainable consumption and production patterns

Goal 13. Take urgent action to combat climate change and its impacts

Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development

Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests,

combat desertification, and halt and reverse land degradation and halt biodiversity loss

Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for

all and build effective, accountable and inclusive institutions at all levels

Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable


19 IFT

Islamic Finance Today November | December 2016


Roadmap to achieve SDGs with Islamic finance:

Key Regulatory Considerations

There are five ways through which Islamic finance

could support efforts to achieve SDGs.

1) Trust and credibility of Islamic finance products

with enforcement of contracts. Foremost, there is

fundamental need to build trust and credibility of

Islamic finance products which are based on contracts.

One way is the standardization and enforcement of

contracts that would be critical in achieving sustainable

growth and financial stability.

With a sustainable and credible Islamic economy, the

goals of SDGs can be realized. From a supervisory

point of view, minimum regulation to enforce contracts

and adequate commitment to implementation of

relevant standards is strongly desired.

It is no surprise that the longest verse in the longest

Surah of the Qur'an (282: Al Baqarah), known as verse

of debt (ayat al dayn), speaks about financial

transactions, the rights of the debtor, the approach of the

creditor, justice and equity, documentation, witness and

evidence, fear of Allah and being conscious of Him.

These measures include:

(a) enforcing sector wide limits for risk-sharing modes

of financing and adjustments in risk weights (RWs) and


(b) encouraging Islamic banks to participate in, and

develop equity-like financing structures and ensuring

banks have in place appropriate strategies, balance

sheet management tools, and techniques including

proper risk management and mitigation with respect to

the risk characteristics of equity-like financing

© ensuring that certain factors (such as taxation and any

sudden policy changes affecting the viability of an

investment) relating to the legal and regulatory

environment will not affect risk-sharing modes of

financing in the jurisdiction

(d) providing more guidance to Islamic banks on

supervisory slotting method for equity-like financing


Figure 2: Key Considerations for Regulators

To underscore the importance of contracts in the

modern era, this year, we saw a Nobel Prize for 2016

awarded jointly to Oliver Hart and Bengt Holmström

“for their contributions to contract theory”. While the

new theoretical tools created by Hart and Holmström

are valuable to the understanding of real-life contracts

and institutions, as well as potential pitfalls in contract

design, their significance was outlined 1400 years ago

by Islam and Islamic finance is built of these contracts.

Cross sectoral


Trust and


Direct link

between the

real and

financial sector

2) Direct link between the real and financial sector.

So how do we ensure direct links? The empirical

evidence from the Islamic banking industry points to

debt-financing being the most dominant form of

financing compared to risk-sharing modes of financing

(Mushārakah and/or Mudārabah).

This makes promotion of risk sharing modes of

financing quite challenging. Risk-sharing modes of

financing are no doubt one of the essential distinctive

qualities of Islamic finance. In the case of equity-like

financing, the following measures, if applied by

regulators, have the potential to ensure a direct link

between the real and financial sector.

“With an Islamic economy,

goals of SDGs can be realized”






Source: Author

3) Regulation and supervision. Strengthening

regulation and supervision is an important component in

the development of Islamic finance, to support higher

sustainable growth, and to foster financial stability.

This includes providing a robust supervisory and

r e g u l a t o r y f r a m e w o r k , i n l i n e w i t h t h e

recommendations of both the BCBS and the IFSB,

covering inter alia, risk management policies, corporate

governance, transparency and Sharia governance, and

ensuring a level playing field to market participants.

Islamic Finance Today - November | December 2016

IFT 20


Therefore, proper regulatory policies (reflecting the

specificities of Islamic financial institutions) and

supervision will ensure Islamic finance will contribute

its part in achieving SDGs. Removing regulatory

impediments (e.g. gaps in financial infrastructure,

policy regulations) to support SD is also imperative.

4) Financial inclusion. The work of the international

work agencies (such as the Alliance for Financial

Inclusion and the Consultative Group to Assist the

Poor) indicate that over half of the world's adult

population - 2.5 billion people - lacks access to formal

financial services.

To underline the importance of this issue from a

supervisory point of view, in September 2016, the

BCBS issued “Guidance on the application of the Core

Principles for Effective Banking Supervision to the

regulation and supervision of institutions relevant to

financial inclusion”.

In this context, while the Islamic banking sector can

support investment and broad-based economic growth,

we need financial deepening and increasing financing

inclusion through access to finance. Primarily, this will

be challenging in terms of policy design,

implementation, and oversight but will increase greater

mass participation in the financial system, which can

help achieve the SDGs.

An important question, however, is: how to ensure

better access to finance inclusion? The answer is

promoting financial inclusion requires, among other


(a) enhancing access to basic banking services

(b) creating a regulatory environment conducive to

promoting financial inclusion and development, for

instance by simplifying regulatory requirements like

KYC and KYCC, setting appropriate RWs for SME

clients using supervisory discretions

© implementing a number of regulatory and tax policies

to provide support to IFIs that would foster greater

financial inclusion

(d) enhancing financial infrastructure covering

procedures towards building credit information which

can address credit risk and lack of collateral concerns.

(5) Cross-sectoral cooperation. Given the nature of

Islamic finance, cross-sectoral exposures are unique,

which raise concerns for authorities that supervise the


“While the Islamic banking

sector can support investment

and broad-based economic

growth, we need financial

deepening and increasing

financing inclusion through

access to finance”

This consideration remains underdeveloped, calling for

cross-sectoral synergy. Other than traditional

components of Islamic finance (such as Islamic

banking, Islamic capital market, and Takāful), policies

and regulations are also needed specifically for Islamic

microfinance institutions, partnership Mudārabah

models, microTakāful, crowd-funding platforms, and

social impact investment.

In order to increase cooperation among different

supervisors within a given jurisdiction, similar to

Financial Stability Committee model, a Cross-Sectoral

Committee (CSF) can be established with specific scope

and mandate. The CSF can have representatives from

the central bank, capital market regulator, and Insurance

regulator, and any other regulator.

In Conclusion

As a system, Islamic finance helps to stimulate

economic activity and entrepreneurship towards

addressing poverty and inequality, ensures financial and

social stability, and promotes comprehensive human

development and fairness. All of these parameters are

relevant to SDGs of which many aspects are covered by

Islamic finance.

By nature, the scope of SDGs is people, irrespective of

religious considerations. However, a large majority of

the 52 countries of the Muslim world are set to be the

principal benefactors of these SDGs.

To this end, Islamic finance being just 2% of global

finance, has a long way to go, but the foundation needs

to be strong. With a strong foundation and credible

financial system, investors will be more likely to bank

on Islamic finance to achieve these goals.

The views expressed in this article are those of the

author, and do not necessarily reflect the views of CBK.

21 IFT

Islamic Finance Today November | December 2016

23 IFT

Islamic Finance Today November | December 2016

Internet of Things & Islamic Financial Services

By Nida Khan


Nida Khan is the developer of the world's first Islamic Finance iOS app and also developed the first of its

kind Islamic Finance android app. She has a Masters in Information and Computer Sciences from the

University of Luxembourg and a Master Diploma in Islamic Finance from AIMS, UK.

The present age is witnessing large scale changes in all

industries and as old models are being replaced by new,

the interim period is wrought with unforeseen

disruptions and instability.

Among the new technologies that are creating and will

go on creating both disruptions and opportunities for

the financial sector is Internet of Things (IoT), which

will prove to be as revolutionary in nature as the World

Wide Web. A better understanding of these

technologies is essential for the Islamic finance sector

to counter problems that arise with them and seize new

opportunities to further their growth and development,

as well as provide financial services to the 1.5 billion

underbanked and unbanked to gain a strong foothold.

Understanding IoT

IoT can be understood more easily as a concept that

essentially captures the connectivity of the digital

economy. It implies connecting any device with an 'on'

and 'off' switch to the internet or to each other. It can be

visualised as a giant network of connected things

including people, by way of people-people, peoplethings

and things-things relationships.

The amount of data generated by interactions between

objects in such a huge network would be staggering. It

has been predicted that by 2020 the world would have

around 75 billion, some even predict more, connected

devices amounting to a global economic benefit of

nearly $2 trillion. These connected objects would

consist of smartphones, wearable devices, smart

homes, headphones, washing machines and everything

one can think of.

The data available from always 'on' IoT devices can be

utilised by banks as they are generated, to enable banks

to act on them immediately. IoT is a reality of present

times and the sooner the Islamic finance sector acts to

utilise it for its benefit the better position it would be in

coming times.

Examples of Opportunities for the Islamic Finance


Takaful: This industry can benefit from data generated

from smart homes and cars via telematics to offer

customised premiums to customers based on amount of

risk or loss they encounter from usage statistics.

This would also enable the Takaful Operator to be better

prepared for the amount of money that would be needed

by a certain individual in the future.

A certain person is irresponsible and can face frequent

losses while another might not be so and there is less

likelihood of him suffering a major loss by means of an

accident at home or a car accident.

So home insurers or car insurers would be aware of the

amount of damage a certain person could encounter and

have funds accordingly so that they are prepared in case

more than one individual suffers a loss at the same time.

This would also promote a sense of justice and harmony

between customers

Payments: The Islamic finance industry is also battling

with the use of credit cards which are against the Sharia.

Muslim consumers are using credit card services that do

not follow the Sharia standards.

IoT offers a wonderful opportunity to deal with this

situation by introducing Islamic debit cards with a

certain allowance to exceed the bank balance in case of

necessity based on the past account details of the


So a loan would immediately be granted in case of

necessity based on Sharia principles instead of the

individual going into the usage of a conventional credit

card and falling prey to the evil of interest. This would

also curb unnecessary spending and offer a kind of

budgeting tool to the customers.

Retail: Consider the company Edo that offers analytics

based on location to help banks offer discounts in real

time. When a customer swipes his debit or credit card

the IoT technology uses data to provide deals and offers

from nearby merchants.

Data and location based analytics can enable banks to

understand customer needs, offer them financial advice,

products and services suited to their current finances

and enhance their savings.

This kind of analytics can also help banks to identify

ATM usage and frequency and determine the optimum

location for future installations based on foot traffic.

Islamic Finance Today - November | December 2016

IFT 24


Apart from similar uses as discussed for the Islamic

finance sector another example of IoT usage in the

conventional financial sector is in investment banking,

where it has been envisaged that high-frequency trading

should not only happen in dark pools but with IoT could

include storms that might delay air traffic, transatlantic

shipping etc. Banks who are aware would warn the

population about the impending storm and

simultaneously indulge in safe investments. The data

available can thus be used for all kinds of dealings.

To safeguard against dubious transactions and ensure

transparency, which is the cornerstone of the Islamic

finance industry it is essential to be aware of the

potential use cases and the impact of the new

technologies. Combining IoT with blockchain would

be a good initiative for Sharia principles as blockchain

would bring about the needed transparency. The

opportunities are endless. The time to act is now. As a

Deloitte leaflet states-

"Another major challenge will be to change the face of

banking—literally. The bankers of tomorrow will be

programmers who can develop algorithms and code to

capture valuable data and provide useful analysis and

advice to consumers."

As Brett King, CEO and Founder of Moven, a mobile

banking application provider and one of the world's

leading FinTech commentators says- "We need to be

teaching young people coding” and that “Technology is

changing human behaviour”

These statements show the great emphasis that the

thought leaders of the world today are placing on

technology, as the coming times will be dominated by a

population grown up in technology who would utilise

banking services in ways starkly different from their


“The bankers of tomorrow

will be programmers who

can develop algorithms and

code to capture valuable

data and provide useful

analysis and advice

to consumers”

Smart Banks

Smartphones, smart systems, smart homes, smart cities

all together would make a smart world. It is but logical

that the financial sector implements the needed changes

to provide smart Sharia compliant financing. A

methodical and structured approach to adapt to the

changing times is needed which can be understood by

the following points:-

1. Recruitment of programmers with knowledge of the

financial sector.

2. Incorporation of a digital department in every IFI.

3. Development of courses in Islamic finance with

subjects like coding and emerging technologies as an

obligatory part of the curriculum.

4. Understanding of data mining to be able to store,

track, analyse and understand the vast amounts of data

that would be generated.

5. Recruitment of data security experts to tackle the

existing and new security threats to the digital data that

would be generated.

6. Reaching out to business transformation consultants

to revamp existing models.

7. Identification of employees with creative thinking for

innovative ideas and review of these ideas by the entire

staff for idea generation and innovation.

8. Involvement of customers and youth through an open

forum for their suggestions and ideas with a reward

system for the best input.

9. Having a problem resolution team that tackles all

unprecedented issues arising out of the new

technologies and keeps track of the changing digital


These are a few suggestions that could be thought of to

deal with the disruptions going on. More points can be

added or subtracted as per an institution's need. What is

vital is that the Islamic finance industry gets involved in

the changes happening in the world by increased

awareness and analysis of the potential impact on the


It’s time to embrace the 'Fin'-ternet of Things and grow

and develop with one of the greatest technological and

social shifts of our times.

25 IFT

Islamic Finance Today November | December 2016

27 IFT

Islamic Finance Today November | December 2016


The Blockchain and Islamic Finance

By Hazik Mohamed

PhD in Islamic Finance (INCEIF) Stellar Consulting Group, Singapore

The main efforts in Islamic Finance so far has been to

create new forms (Sharia-compliant standards) to

operationalise Islamic values and ethics into the current

conventional economic system and banking products.

While this is crucial to sustain the world as it is today,

we also need to develop new strategies to cope with the

next economy, which starts with a clear and deliverable

vision of a new world economy. And the new vision of a

new world economy will be driven by those who

embrace innovation that will build the future.

Here we look at the main building block to enable trust

in impersonal financial transactions in a highly

globalized society. This innovation called the

blockchain will play a crucial role in boosting the

financial sector (banking, insurance, investment, etc.)

including the Islamic Finance sector. Addressing the

digital revolution that is happening right now will foster

competitive advantage for the Islamic Finance industry.

It is clear that the digital revolution in financial services

is under way, and digital disruption has the potential to

shrink the role and relevance of today's banks, while

simultaneously creating better, faster, cheaper services

that will be an essential part of everyday life in the new


Fintech Revolution

Over the last decade, disruptive innovation in financial

services has emerged from financial technology

(fintech) start-ups. These new firms have been quicker

than banks to take advantage of advances in digital

technology, developing banking products that are more

user-friendly, cost less to deliver and are optimised for

digital channels.

This relative success is unsurprising. These new players

are less burdened by the demands of regulatory

compliance which banks are subject to. They are

unencumbered by complex and costly-to-maintain

legacy systems. They can focus on creating singlepurpose

solutions, designed to offer an improved

experience within just one product or service.

They are more in tune with the peer-to-peer (P2P)

culture engendered by the explosion of social media.

And they are smaller organisations, designed for the

purpose of innovation.

Also, much capital has flowed into the fintech sector:

US$23.5 billion of venture capital investment in

2013/14, according to an analysis by Oliver Wyman.

Of this investment, 27% has been in consumer lending,

23% in payments and 16% in business lending. Fintech

has two unique selling points: better use of data and

frictionless customer experience. But to date these have

been limited to relatively simple propositions such as e-

wallets and P2P lending.

The conventional finance sector is already scrambling

to cope with these digital disruptions in order to stay

afloat and finding ways to embrace such disruptions in

their respective sectors to stay relevant and retain

market share.

Certain segments within Islamic finance has been too

caught up in Sharia-compliance debate instead of

recognizing that we are at the cusps of an economic

evolution. The industry should also recognize that these

technological advancements are essentially aligned to

the principles of the Sharia that requires and upholds the

values of trust, honesty and transparency.

In this article, we attempt to highlight the potency of the

blockchain (the backbone to the cryptocurrency

technology), and subsequently its potential applications

as the technical experts unleash its capability and evolve

its strength, very much like the internet in the late 1990s

and 2000s.

“This innovation called

the blockchain will play

a crucial role in boosting

the financial sector

including the Islamic

Finance sector”

Islamic Finance Today - November | December 2016

IFT 28


What is the Blockchain?

Blockchain is a peer-to-peer public ledger maintained

by a distributed network of computers that requires no

central authority or third party intermediaries. It

consists of three key components: a transaction, a

transaction record and a system that verifies and stores

the transaction. The blocks are generated through opensource

software and record the information about when

and in what sequence the transaction took place.

This “block” chronologically stores information of all

the transactions that have taken place in the chain, and

therefore the name — blockchain. In other words,

blockchain is a database of immutable time-stamped

information of every transaction that is replicated on

servers across the globe.

This technology is the foundation of cryptocurrencies

such as the bitcoin. In fact, blockchain technology was

first introduced in 2009 with Bitcoin, a cryptocurrencybased

distributed payment protocol.

Blockchain's main innovation is a public transaction

record of integrity without central authority.

Blockchains are decentralised by nature that is shared

by all nodes connected to a set network.

How the blockchain works for cryptocurrencies

Blockchain technology offers everyone the opportunity

to participate in secure contracts over time, with a secure

record of what was agreed at that time. This innovation

carries a significance stretching far beyond


The blockchain lets people who have no particular

confidence in each other collaborate without having to

go through a neutral central authority. Simply put, it is a

mechanism for creating trust. Within this open ledger

system, the blockchain offers an inherent level of trust

for the user, eliminating the need for the middleman and

mitigating the risk of human error.

Its publicly accessible log of transactions ensures that

the data is protected against tampering and revision, and

it is virtually impossible for individuals to modify or

replace parts of the blockchain secretly.

A full copy of the blockchain contains every transaction

ever executed, making information on the value

belonging to every active address (account) accessible

at any point in history. Every block contains a long

reference number or hash of the previous block, thus

creating a chain of blocks from the genesis block to the

current block. Figure 1 illustrates how a transaction is

recorded on the blockchain, based on the

cryptocurrency protocol.

Source :

29 IFT

Islamic Finance Today November | December 2016


Validation is required for a new block to be added on to

the blockchain. This validation process, also called

mining, allows pending transactions to be confirmed;

enforces a chronological order on the blockchain;

protects the neutrality of the blockchain; and enables

different computers (or nodes) to agree on the state of

the system at any given time.

In traditional transactions such as money transfers or

foreign currency, there is usually an intermediary or a

centralized entity that records the transmission of

money or currency that exist apart from it. In

blockchain, the token or digital coin itself is what has

value, which is determined by the market. This is what

makes the system a truly decentralized exchange.

When people buy or sell bitcoins, a secret key or token is

broadcast to the system. “Miners” use nodes, computers

or devices linked to a network, to identify and validate

the transaction using copies of all or some information

of the blockchain which is accessible publicly. Before

the transaction is accepted by the network, miners have

to show 'proof of work' using a cryptographic hash

function (a special algorithm) that aims to provide high

levels of protection.

[Proof-of-Work (PoW) is a function that is hard to

compute, but easy to verify, which serves as a

probabilistic cryptographic proof of the quantity of

computational resources controlled by a given node.

Every block requires a PoW with a pre-specified

difficulty level in order to be valid, and in the event of

multiple competing blockchains the chain with the

largest total quantity of PoW is considered to be valid].

As progress is made in the blockchain technology, its

use will become more efficient and applicable in many

ways, i.e. to transact anything of value, not just

digitizing currency.

Evolution of the Blockchain

Not only is there the possibility that blockchain

technology could reinvent every category of monetary

markets, payments, and financial services but it might

also offer similar reconfiguration possibilities to all

industries within the economy, e.g. as registries for

luxury goods (diamonds or works of art) and smart

contracts for loans, wills and trusts, or intangible assets

like patents, trademarks and copyrights.

The blockchain is fundamentally a new paradigm for

organizing activity with greater efficiency, and greater

scale than current models.

We believe that the blockchain technology leverages on

decentralization well and offers a truly global scope and

scale that was previously impossible.

Limitations of the Blockchain

The blockchain industry is still in the early stages of

development, and there are many kinds of limitations.

Ideally, the blockchain industry would develop

similarly to the cloud-computing model, for which

standard infrastructure components - like cloud servers

and transport systems - were defined and implemented

very quickly at the beginning to allow the industry to

focus on the higher level of developing value-added

services instead of the core infrastructure.

The current limitations are both internal and external,

and include those related to technical issues with the

underlying technology, public perception and

government regulation.


The promise of the blockchain creates the possibility of

coordinating our transactional activities within a strong

mechanism of trust and transparency. This public ledger

system of transparency and then making it available to

anyone like the internet seems to be able to solve the

coordination for the transactions that occurs within the

now global economy.

Thus blockchain is the technology that will

operationalize the mechanism of trust as we progress

from personal exchange to impersonal exchange due to

globalization. We suspect that this technological

backbone will be commonplace in 6 to 8 years' time,

through the advent of crypto-currencies, smart

contracts, full-reserve lending platforms, multicurrency

money transfers, etc.

Fintech using the blockchain technology will

incorporate Islamic values (of trust, justice, equality and

efficiency) into finance that embodies and promotes the

spirit of the Sharia. In addition, the adoption of the

blockchain technology will allow Islamic Finance to

adapt to the changing landscape of modern economic

transactions instead of playing catch-up by replicating

soon-to-be outdated conventional practices.

“Fintech using blockchain

technology will incorporate

Islamic values into Finance”

Islamic Finance Today - November | December 2016

IFT 30

31 IFT

Islamic Finance Today November | December 2016


The Brave New World and the Role of Islamic Finance

By Muath Mubarak

Muath Mubarak is an Islamic Banking Trainer and CEO, First Global Academy, Sri Lanka

Today there are more than 700 Islamic Finance

Institutions (IFIs) operating in over 75 countries across

the globe ranging from full-fledged Islamic banks,

Insurance firms to the capital market.

Islamic finance is expected to grow USD 5-8 Trillion

globally in asset size by 2020 but the incorporation of

high tech developments in the industry should result in

multifold asset size much greater than expected.

Hence there is a need for the Islamic Banking and

Finance Sector to keep up with the developments of the

disruptive technology industry which has recorded

exponential growth over recent years.

In fact disruptive technology is fast becoming the key

enabler for future businesses and banking with growing

global competition and tech-savvy clients. Such

technologies give customers an easy, safe and secure

experience from any device they choose to use at any

given time.

The world is fast moving towards unpredictable

technological changes with disruptors and hi-tech

entrepreneurs. Soon we may well be driven by electric

and autonomous cars with zero accidents. The

manufacturing industry and related jobs will be

replaced by 3D printing which will be printing cars and

equipment for flights. The software industry will

disrupt traditional business models such as travel sector

by AirBnB, taxi services by Uber and service industry

by IBM Watson.

Think of the implications these developments will have.

When autonomous cars are widely used with zero

accident, it will invariably prompt the insurance

industry to be innovative and find business

opportunities when there are no predictable accidents.

“There is a need for

the Islamic Banking and

Finance Sector to keep

up with the developments

of disruptive technology”

Meanwhile, it is also predicted that people will no more

be interested in owning a car, so this will leave a dent on

the bank's lending products too. These technological

changes must of necessity lead to a totally new way of


New Way of Banking

The UAE's Dubai Multi Commodities Centre (DMCC)

Commodity Murabahah Trading Platform (CMTP) is

one of the initiatives enabling the electronic transfer of

ownership and possession through tradable warrants.

This move approved by renowned Sharia scholars is a

bold one and provides a holistic solution to the Islamic

finance industry through a fully electronic commodity

Murabahah trading platform with a complete transfer of

ownership. This facilitates high efficiency and reduces

operational costs in a Sharia compliant way. This is an

inward technological innovation in Islamic banking.

Another important milestone is the technology advance

outward to leave a better end-to-end customer

experience when they are banking. Fintech has emerged

over recent years replacing mainstream banking

activity with a simple URL / Website. The necessity of

this is largely attributable to internet penetration and

smart phone users subject of course to the stringent

regulatory environment of the financial industry.

One of the latest moves by Malaysia is through, a platform to facilitate

channeling funds from investors to viable ventures and

projects. IAP is backed by Islamic banking institutions

which will facilitate the matching of investments with

the identified ventures or projects that are in need of


Innovation & Creativity in Islamic Economy

In the recent report “State of the Global Islamic

Economy” published by Thomson Reuters Islamic

Finance Gateway, Islamic Economy includes Shariacompliant

Finance, Food, Fashion, Tourism, Media,

Pharmaceuticals and Cosmetics. The different sectors

within the Islamic economy have been recognized by

the "50 most Innovative Global Muslim Start ups'


Islamic Finance Today - November | December 2016

IFT 32


For instance, Have Halal Will Travel mobile app has

raised a $50,000 seed round from one angel investor in

Singapore and a FinTech site

from Singapore raised $363,000 seed round. Key

Traction - Crowd funded $2.6 Million dollars to build

5000 affordable homes in Indonesia.

The global Islamic economy is now becoming more

interesting to the market and is in need of tech savvy

entrepreneurs and professionals to explore current

technologies and their application to different sectors of

this growing industry, especially in ways that will make

it more competitive and cost-effective.

. The following diagram illustrates the mechanism of IAP


The innovation in banking can range from delivery channels (ATMs no more require pin code or ATM cards),

process innovation (DMCC illustrated above) and product innovations (IAplatform illustrated above). The

followings are the innovators of 2016 as per the Global Finance magazine (June 2016).

Organization Type of Innovation Innovation

Abu Dhabi Islamic Bank Process Innovation A New Digital Studio With IBM


Self Service Channel With Diebold

Al Rajhi Bank



Al Rayan Bank/Masraf

Brand Reinforcement and Product

Marketing Innovation

Al Rayan


Amãna Bank Product Innovation Gold/Pawning Facility

Beehive Group DMCC Product Innovation P2P Financing

Bidaya Home Finance Process Innovation Website

Dubai Islamic Bank


Central Theme of Innovation and



Emirates Islamic Bank Product Innovation El Trade

Malaysian Bank


Marketing Innovation Investment Account Platform

Meezan Bank Process Innovation MeezanUPaisa

Millennium Information


Process Innovation Ababil

Noor Bank Product Innovation YVO Mobile Application With Yvolv

Path Solutions Process Innovation iMal Islamic Banking Platform

Temenos Process Innovation T24 Cloud Islamic

33 IFT

Islamic Finance Today November | December 2016


The Synergy of SMEs and FinTech:

A Revolution in the making

By Nur Shaira Mohd Yusoff & Nur Sakinah Nabilah Nor Saeran

Nur Shaira Mohd Yusoff is an Executive at ISRA Consultancy Sdn. Bhd. Nur Sakinah Nabilah Nor Saeran is a

Sharia Management Trainee at ISRA

How can we boost the economy and increase the rate of

employment in a given country?

This is an invariable question global economists

constantly try to resolve. The growth outlook for 2017

shows a persistent trend of stagnation in the global

economy. In this context initiatives must be taken to

intensify the Small and Medium Enterprises (SMEs)


The brisk evolvement of SMEs in the economy is

crucially important in contributing to the increment of

the employment rate and the gross domestic product

(GDP). According to the World Bank, 45 percent of

total employment and 33 percent of national income are

contributed by SMEs, which is indeed remarkable.

The Islamic Finance industry's rapid growth globally

opens doors of opportunities for SMEs. It has given

SMEs the opportunity to enter into the market and

knock on the government's door to explore and acquire

pertinent facilities.

In Malaysia for instance, a Sharia-compliant SME

Financing Scheme (SSFS) was initiated to

accommodate financing for SMEs that wish to adhere to

the principles of Sharia. The prime objective of the

scheme is to provide financial assistance to eligible

SMEs. Vitalizing Islamic Finance and SMEs will

ensure a brighter future for an Islamic economy.

Effect of Financial Crisis on SMEs

There have been various discourses on financial crises

and the reasons it happen. Some are due to banking

panics as in the 19th and early 20th century and others

are associated with stock market crashes, financial

bubbles, currency crises, sovereign defaults, etc.

Despite several theories offered by economists on how

to prevent financial crisis from occurring, it continues to

happen from time to time.

Such theories include Austrian business cycle theory

and Law of Tendency for the Rate of Profit to Fall

(TRPF) by Karl Marx.

One of the worst financial crisis since the Great

Depression in 1929 was the financial crisis of 2007-

2008. The cause, among others, was the high default

rate in the subprime home mortgage sector. This led to

the collapse of some large financial corporations, which

caused failure of key businesses and decline in

consumer spending.

The Malaysian economy was also affected by such

downturns, especially the manufacturing and

construction sectors which were the most affected

sectors. This led to higher unemployment and

retrenchments. In stimulating and strengthening the

resilience of the economy, the government of Malaysia

provided guarantee schemes to assist SMEs in raising

funds for working capital, industry restructuring, and

raising loans in the bond market.

SMEs were chosen due to their important contribution

to total employment and gross domestic product (GDP)

as well as the fact that they comprise 99 percent of total

registered businesses in Malaysia.

The New Player in the Market: FinTech

To achieve the goals of SMEs, modern day financial

technology, also known as FinTech could be easily

utilized to enhance these businesses. FinTech is a

business line based on software technology to provide

financial services. For the majority of SMEs, FinTech is

seen as a revolutionary mechanism that can provide

new opportunities and assist in revenue streams, which

will enrich their development. The synergisation of

FinTech and SMEs is no doubt the best solution to

financial crises.

Moving forward, SMEs could manipulate the

innovation of FinTech in developing their business via

e-commerce. Their credit risk analysis, especially for

small businesses which lacks data that could inform of

their credit score, could be supported by data from nonfinancial


For example, data from service providers like utilities

and telecommunications companies which show the

borrower's history of paying bills on time.

Islamic Finance Today - November | December 2016

IFT 36


Besides, FinTech could help speed up the transaction

process between parties; in particular the use of

blockchain technology which is replacing the old

digitization of commerce.

Instead of verifying the shipment's arrival through

intermediaries, geolocation data could be manipulated

to execute a smart blockchain contract automatically

upon arrival of the shipment. This could help the

smaller firms with significant liquidity constraints.

An important role that FinTech is offering to SMEs is

providing them with wider access to financing or

funding. This includes equity funding like

crowdfunding platforms, money transfer, mobile

payments, and trading platforms. This could contribute

funds to small businesses or start-ups which are

ineligible to acquire loans from banks. At the same time,

whole transactions will be faster and cheaper.

Government and charitable organizations should

become the strongest substructure to the development

of SMEs, which include supporting FinTech that

supplement the growth of SMEs. The financial industry,

including Islamic financial industry, should also give

their support and embrace it as a great opportunity.

Muhammad Bin Ibrahim, Governor of the Central Bank

of Malaysia had this to say at the Global Islamic

Finance Forum. We quote: “Fintech is challenging the

status quo of the financial industry. New business

models will emerge. Delivery channels will challenge

existing norms. Transaction costs will be reduced.

Rather than looking at the fintech revolution as

unwelcoming, financial institutions ought to embrace it

as an opportunity”.

Indeed, FinTech alongside with SMEs could contribute

from twenty percent to forty percent to the revenues of

any country.

Islamic Finance Supporting SMEs through FinTech

Despite the new faces of FinTech and the swift

development of SMEs, Islamic Finance could bring a

new evolution to the global market.

Economists and financial players should initiate wider

dialogues and discussions on how to better aid and

support both the SMEs and FinTech synergy with the

auxiliary of Islamic Finance. Lending a hand to both

SMEs and FinTech could bring a revolution to the future


A lesson could be learned from other countries on how

Islamic Finance could be married with FinTech in

enhancing SMEs. For instance, Dubai-based Beehive

which provides finance to SMEs at lower cost by way of

peer-to-peer financing via Commodity Murabaha


Through “Beehive Sharia Processing” certification

received from the Sharia Review Bureau, it became the

first peer-to-peer platform that complies with Sharia

principles. A total of $6.7million was channeled to 50

SMEs in 2015 which entitled them to receive Gulf

Capital SME Awards.

Apart from Beehive there have been other Sharia

Compliant platforms that support SMEs such as

KapitalBoost, EthisCrowd, Waqf World, LaunchGood,

Shekra, Blossom Finance, etc.

37 IFT

Islamic Finance Today November | December 2016


Mobile APP

Get Your

Islamic Finance App


Developer : Nida Khan

Islamic Finance is the first app on this platform, which gives you a concise introduction to Islamic finance while

simultaneously giving you Islamic finance, finance and business news from across the globe from diverse news sites.

The app has been adapted to receive RSS feed links from some sites to enhance the user experience. Few news sites

in the local language of the people of India, namely Urdu and Hindi also feature in the app to cater to the booming

economy there. The app touches upon all the subjects relevant to this sector. An extensive use of graphical

representations will enable an easy comprehension of the subject and serve as an aid to memorizing facts.

It will serve as a pocket guide for the professionals of this sector, as well as for those learning about this sector. It will

also keep the professionals of this sector always aware of the latest happenings in the financial world. All the

theoretical content in the app can be saved to be viewed in offline mode and you will not need an Internet connection to

continue your knowledge enhancement, post saving it on your device. The app will teach the basics of this sector to

even those, who don't know anything about Islam.

The app talks about the prevalent modes of finance in this sector like Musharakah, Ijarah etc., defining the rules

governing the said transactions and drawing comparisons wherever needed. It also talks about Sukuk or Islamic

Investment Certificates and the role that they play in this sector. In addition the app talks about the necessary

conditions required to deal in shares. It also touches upon the topic of innovation in Islamic finance, sharing the

thoughts of the developer.

39 IFT

Islamic Finance Today November | December 2016

Digital platforms: the future of employment

in Islamic finance

By Paul McNamara


Paul McNamara is a well known editor and author specializing in Islamic Finance. He is the founding editor of

Islamic Business & Finance magazine and was instrumental in setting up the Journal of Strategic Thinking on

Islamic Finance.

Worker-owned digital platforms could be the best way

of putting the future of employment within the Islamic

finance sphere back in the hands of the workers


The very nature of doing business has changed

substantially over the past few years and it has caused

seismic shifts in employment patterns.

There is a growing body of disenfranchised workers

desperate for an end to the dystopian employment

future they see ahead of them. This helps to explain

recent unpredictable events like Brexit and the result of

the US presidential election.

The stark reality seems to be that it is becoming harder

and harder for the world's youth to find work. It does not

matter which country or industry or sector is under

review, the net result is the same: there are fewer jobs to

go around.

It has always been hard for newly qualified students to

find meaningful jobs in the Islamic finance industry but

this global trend has affected the sector particularly


Chilling data

Data from the International Labour Organisation, the

UN agency, indicates that by 2016 the global youth

unemployment picture had started to worsen once again

after a few short years of improvement. The numbers

are chilling.

The number of unemployed youngsters between the

ages of 15 and 24 across the planetas a whole is set to

growl by 500,000 this year to 71m. This means that the

youth jobless rate could show a rise from 12.9 per cent

in 2015 to 13.1 per cent in 2016.

The start of the recent trend of deteriorating prospects

for the young stems from the global financial crisis but

the trend has continued to wax and wane, mirroring the

ups and downs of the patchy global recovery.

The employment picture has been bleakest in energybased

economies such as the oil and gas markets of the

Gulf where the falls in commodity prices has proved


The data suggests that youth unemployment in middleincome

emerging markets will grow from 13.3 to 13.7

per cent in 2016. The equivalent rate for poorer nations

could grow from 9.4 to 9.5 per cent during the same


Equally worrying, the International Labour

Organisation points out that youth are far more likely to

be tied to jobs that are solowly paid that it is virtually

impossible for them to escape the poverty trap. The

highest working poverty rate for young people can be

found in sub-Saharan Africa these days but the Arab

states also show a level that is far higher than desirable –

running at around 39 per cent.

International youth migration is one of the by-products

of this reality: one in five young persons around the

world are prepared to move overseas permanently in

order to find work.

Enter the gig economy

Taken collectively, these developments indicate a

strong and continuing trend towards a new reality in the

workplace. Jobs for life and steady careers are

becoming a thing of the past with older workers

constructing 'portfolio careers' and younger workers

taking part in what is becoming known as the 'gig


Much recent research suggests that in the next 10-20

years, the number of people working on an ad hoc basis

as freelancers, contractors or holding down multiple

part time jobs will rise steadily.

This will impact the Islamic finance industry as sharply

as it does the rest of the 'old world economy'. Whether it

is a sustainable matrix is yet to be seen and only time

will tell.

Islamic Finance Today - November | December 2016

IFT 40


In the present day and age, painted as the epoch that will

see the rise of artificial intelligence, this labour market

development is not viewed as wholly positive.

Words of wisdom

The situation was perhaps best summed up by President

Barack Obama, writing in The Economist newspaper in

October 2016 when he said, “But some of the discontent

is rooted in legitimate concerns about long-term

economic forces. Decades of declining productivity

growth and rising inequality have resulted in slower

income growth for low- and middle-income families.

Globalisation and automation have weakened the

position of workers and their ability to secure a decent

wage. Too many potential physicists and engineers

spend their careers shifting money around in the

financial sector, instead of applying their talents to

innovating in the real economy. And the financial crisis

of 2008 only seemed to increase the isolation of

corporations and elites, who often seem to live by a

different set of rules to ordinary citizens.”

Workers overall are set to become commoditised as jobs

at all ends of the spectrum get handed out on an ad hoc

basis to the lowest bidder. There will be a rush to

minimising cost at the expense of quality and the

increasing use of technology will only exacerbate this

decline as labour's share of the economic pie, which has

been in decline for the last half century, continues to

suffer. Unless this can be halted and reversed, the

picture looks bleak.

The role of digital platforms

The one hope of implementing such a shift seems to lie

in the increasing use of digital platforms that are owned

by the workers themselves.

Imagine an Uber that is owned by the people doing the

driving rather than some fat cat private equity company.

Such digital co-operatives could be the means of putting

the future of employment back in the hands of the

workers themselves.

It is perhaps in this realm where the greatest opportunity

lies for the Islamic finance industry to take a lead and

achieve the kind of growth that it has promised for the

past 40 years, but never delivered.

An Islamic finance space that was run and operated by a

series of companies that are organised as digital

collectives with the true tenets of the Sharia at their base

– rather than unwieldy organisations run by people who

lack the skills and vision to run them and owned by

people with a focus solely on the bottom line at the

expense of running an enterprise in an ethical and Sharia

compliant way.

The sad truth is that the industry is still a long way from

this sort of level of enlightenment and so the job

prospects for young students to find meaningful roles

within the industry are limited indeed.

But if there is a forward-looking Islamic private equity

or venture capital consortium ready and willing to back

the longevity of the business trend towards collaborative

digital platforms then help may be at hand.

Better than this, such a development could prove to be

the whole raison d'être behind the growth of the Islamic

finance industry in the first place.

Now, wouldn't that show prescience?

41 IFT

Islamic Finance Today November | December 2016

43 IFT

Islamic Finance Today November | December 2016


Millennials & Islamic Finance

By Blake Goud

Blake Goud is CEO of the Responsible Finance & Investment (RFI) Foundation, a non-profit organization

working to identify a universal value proposition for responsible finance that includes Islamic finance. He was

Community Leader at Thomson Reuters' Islamic Finance Gateway and Chief Research Officer at Middle East

Global Advisors.

Millennials want to see something more from their

career, from their financial institutions or even when

they buy a pair of shoes. There is a shift in younger

consumers around the idea that “the success of a

business should be measured in terms of more than just

its financial performance.”

This belief-identified in research by Deloitte which

surveyed Millennials from the United States to Europe,

Latin America, Turkey, Southeast Asia and China,

found that nearly nine in ten respondents agreed with

the wider focus of business in society.

When you ask what Millennials value themselves, in

their careers and in the companies they buy from, they

talk about having a positive impact on society. But they

don't just look for companies to say the right things,

they look for action and signs from businesses that they

are able to be trusted to behave consistently with the

values they publicly sign up to. They look for

companies with quality products, companies that have

high employee satisfaction, and are able to deliver

similar satisfaction to their customers.

Social Impact of Islamic Finance

Interestingly, and not surprisingly given the ethical

framework which guides Islamic finance, people look

for similar indications of trust, safety and social impact

from Islamic finance as well. A small survey-based

study released recently found that transparency,

trustworthiness, truthfulness and fairness were

important qualities for customers deciding whether to

deposit with Islamic banks. In addition, the customers

were concerned with corporate responsibility and

community welfare when making a decision.

The overlaps between Millennials as a group and

Islamic bank customers in what they value is notable.

While the concerns of Muslims include Sharia

compliance, and may be a make-or-break factor for

some, it is not the only decision factor. Some Islamic

banks have become more aware of this and are reaching

out to people on the basis of their products being

grounded in trust, fairness and honesty.

But most have not and there is a quiet complacency with

the generational shift. One can still hear talk of how

young Islamic finance is relative to conventional

banking which rings a little hollow now more than it did

a decade ago. This is especially true when you consider

the demographics of Islamic banks' customer base

which has changed significantly over this time.

Growth Potential

A decade ago, only the oldest of the Millennials were in

the workforce and none were in their prime earning

years. For a young industry, the older generation was

'where the money was' to paraphrase Willie Sutton. Yet

today, the situation is the reverse. Older Millennials are

entering peak earning years and Millennials of all ages

are the bulk of the growth potential for Islamic finance.

The difference between an older generation who were

served by last decade's Islamic finance industry and

today's young consumer base is that today, Millennial

Muslims have grown up always having a Sharia

compliant option available. It no longer becomes as

much of an exceptional feature as just the baseline of

what they expect and their expectations for what

Islamic finance should deliver becomes more nuanced.

The benefit for Islamic finance from these changes to

consumer preferences and demographics is that instead

of being harder to serve their core market, it becomes

easier to serve their core market and expand into others.

There is a long-running debate about how much Islamic

finance should focus just on Muslims or focus on being

something that delivers a universal good for humanity.

The changes underway make it imperative to deliver on

universal principles within Islamic values to maintain

the growth of Islamic finance and expand its appeal to

the wider world.

“The overlaps between

Millennials as a group and

Islamic bank customers in

what they value is notable”

Islamic Finance Today - November | December 2016

IFT 44

“Talent is universal;

opportunity is not”

Human Capital Mudaraba

for expanding higher education opportunities

By Charles Selestine

Charles Selestine is FISA Development Manager at

Wedu. He holds an MA in Islamic Banking Finance and

Management from the University of Gloucestershire,

and has worked with an Islamic Bank in Qatar.

45 IFT

Islamic Finance Today November | December 2016


Imagine this

You are a young lady from rural Cambodia who has just

completed high school. Your parents support your keen

desire to go to college, but do not have the means to

support you. Your father decides that if you choose to go

to college, you should study Accountancy – he deems

this a suitable job for a young woman, based on existing

social mores. Your dad, a subsistence farmer, scrapes

together enough money for the first of eight semesters,

and says, that is all he can do to support your dream. You

have no idea if you will ever get the funds to pay for the

remaining 7 semesters.

Would you enrol? Would you plunge in, without any

plan beyond the first semester? Wouldn't that be

imprudent and reckless? What if you were very eager to


There was no fairy tale ending in the above instance.

Thida* did enrol, and when the semester came to an

end, she had to drop out. She struggled, worked as a

waitress among other jobs, and scrimped for two years

to try and re-enrol. All the while, she kept looking for

any kind of financing for her education.

The purpose of this article is not to highlight a story of a

determined student overcoming odds, though I reckon

we have all come across such stories and have been

inspired by them. Our purpose is to explore solutions -

particularly, one that should resonate with the Islamic

Finance community.

Sources of funding

Typical sources of funding for higher education are selffunding,

scholarships/bursaries and loans. Let's look at

these from the perspective of a student from a low

income family, in a less developed country.

First, self- funding -in most instances the family simply

doesn't have the money to fund a young person's higher

education. Second, scholarships -these few are

between, and it is very difficult for a vast majority to

secure these.

Third, loans - many financial institutions consider

education loans risky, and choose not to provide such

longer term loans. Even where such an option may be

available, the conditions are typically stringent – high

interest rates, need for real assets as collateral, a

guarantor who has a steady income etc.

It has been found that even in affluent countries, with

reasonable terms for education loans, students from

lower income families are reluctant to avail of these

loans, as their families consider it too risky.

Islamic Finance Today - November | December 2016

Investing in potential

What if you are willing to invest in Thida's potential, and

benefit from it too? You determine Thida's willingness

and ability to pay. Satisfied with your analysis of Thida's

character and future income potential, you decide to

fund her education, in return for a share of her future

income. For example, in return for USD 1000 to pay her

fees, she agrees to share 5% of her future monthly

income, for a period of 3 years.

From Thida's perspective, this is an excellent solution.

Without depending on her family, she is able to finance

her education and share the fruits of her enhanced


From an investor's perspective, it is an opportunity to

back the potential and change the lives of young people,

while sharing with them the financial risks and rewards

of higher education.

From society's perspective, it is an effective way of

spreading access to higher education, without

depending on scarce public resources. So, are Income

Sharing Agreements (ISAs) a viable way to finance

higher education?

Inclusive Education

I was in Phnom Penh to attend a financial inclusion

conference earlier this year, and was privileged to meet

Thida and two other 'Rising Stars'. All of them are

socially conscious, dynamic young women who had

engaged in social work and volunteering from a young


They viewed a university education as critical to their

personal development and growth. They had used ISAs

to finance part of their college education. Over coffee,

they shared their struggles, experiences and views on

Income Share Agreements.

Wedu, which provided Thida and the others with the

ISA financing, is a non-profit social enterprise based in

Bangkok. Wedu unlocks the leadership potential of

young women in 'less developed' countries, towards

becoming leaders of social change in their communities.

“It is an opportunity to back

the potential and change

the lives of young people”

IFT 46


These inspiring young women, called 'Rising Stars', are

engaged through a leadership development program

which includes one-on-one mentoring, combined with

financial support to complete their higher education.

Wedu is pioneering the use of ISAs in Asia. Lumni, has

been providing ISAs since 2002 in South America and

expanded their operations to the USA. Purdue

University launched an ISA progamme this year. There

are other for-profits and not-for-profit organizations

providing ISAs.

There are challenges in developing an innovative

financial product, which can provide immense benefit to

society. Discussing these challenges are beyond the

scope of this article. At Wedu, with our current focus on

Asia, we strive to source and collate reliable information

to base funding decisions. We seek ways to harness the

social collateral developed through our community of

Rising Stars, Mentors, Talent Spotters, Partners and

others, as a risk mitigation tool.

In conversations with Rising Stars who apply for FISA

financing (in Wedu, we call our product Future Income

Sharing Agreements), they highlight the flexibility and

affordability of FISAs. It is heartening to note that the

Rising Stars are keen that their income shares go to

support future applicants, in a growing, revolving pool.

We aspire to build such a Fund.

Enter Islamic Finance

Over the past decade, I have attended many Islamic

Finance conferences – Banking, Takaful, Investments,

Funds etc. Invariably, some speakers would bring up the

socially beneficial ideals of Islamic Finance.

Other speakers would espouse risk-return sharing as

keeping with the strictures of Islamic Finance, and as a

principle and practice to be encouraged.

ISAs tick both these boxes. Income Share Agreements

are not a theoretical construct, but a live solution that is

right now, helping lower income students get a

university education.

Commenting on the Sharia Compliance aspects of

Human Capital Mudaraba is beyond my competence.

Rakaan Kayali has done an excellent piece on HCI

entitled “The Coming Revolution”, published in the

October issue of Islamic Finance Today. Further, in his

blog Practical Islamic Finance, Rakaan has delved indepth

into Human Capital Investments, in a discerning,

straightforward and clear manner.

If you are a Sharia Scholar, Academic, Practitioner or

anyone else who is interested in supporting Wedu's

exploration of the Sharia Compliance of Human Capital

Investments / Income Sharing Agreements, you are

most welcome.

The title of this article is a phrase from Rye Barcott's

2011 book, It Happened on the Way to War. There are

many capable, talented, deserving students from low

income families, for whom finance is the only obstacle

to higher education and the life changing possibilities it


If there is a solution that aligns closely with the values

and ethos of Islamic Finance, shouldn't we develop and

promote it?

*Name changed to protect identity

47 IFT

Islamic Finance Today November | December 2016

49 IFT

Islamic Finance Today November | December 2016


The Effect of Currency Inflation on Debt Repayment

By Abdulazeem Abozaid

Dr.Abdulazeem Abozaid is Associate Professor, Islamic Finance Program, Qatar Foundation. He has worked at

universities as well as in Islamic banks. He holds a PhD and Master in Islamic Financial Law.

During wars and domestic conflicts, currencies tend to

lose their values. This raises the inevitable question of

how debts should be repaid; shall the depreciation in the

currency value be taken into account so that the debtor

shall be required to repay an excess to the debt to

compensate the lender for the loss, or that he will have to

pay only the exact debt amount because any excess on

the principal amount is Riba?

This question is evidently relevant to the countries that

have witnessed long-lasting revolutions such as Syria

and Yemen, where the revolutions in these two countries

have led to a drastic change and a steep decline in the

value of their currencies.

Some contemporary scholars have shown hesitation

and reluctance to give a Fiqh opinion on this serious

matter. In fact, the issue of exorbitant change in

currency values is one of the most important economic

issues of our time, given the nature of the money in

circulation as being a legal tender having no intrinsic

value whatsoever.

Fiqh Academy, back in 1988, issued a resolution to the

ineffectiveness of the currency value fluctuations on

debt repayment. This resolution was reiterated later by

another one issued in 1993. However, both resolutions

were issued in the context of currencies that did not

undergo the excessive depreciation we have recently


The Iraqi Dinar, for example, lost more than 95% of its

value in 2003, and the Syrian Lira has recently lost 90%

of its value! This means that if the debt in such a

currency is to be repaid with no consideration to this

drastic change, the creditor will effectively receive only

a little fraction of his debt. This, in fact, necessitates

revisiting the Ijtihad on this matter in order to realize

justice and meet the Sharia objective in achieving

fairness in financial deals.

Debt Value

To start with, the above issue was not expressively

discussed by the early scholars since gold and silver,

and not fiat money, were in circulation at the time.

However, the general stand one can imply from reading

the Fiqh literature pertaining to this issue is

that debt has to be repaid in the same amount regardless

of any change in the debt value. Nevertheless, we find in

the Hanafi Fiqh literature support for the need to take

into account the new value of the currency when

repaying a debt.

The Hanafis perceived that depreciation of currencies

could impact fulus, and fulus was a currency with a

weak purchasing power, which was used alongside the

gold dinars and the silver dirhams. Fulus were either

made from bronze or iron, and were used to buy things

of trivial value or as a complementary to dinar and


Hanafi jurists were of the opinion that the value of the

fulus could drop as it did not have an intrinsic value,

unlike the silver dirhams and the golden dinars, which

had intrinsic value. Currencies that are now in

circulation are comparable to fulus as the value of both

is subject to fluctuation.

In fact fiat money is more susceptible to inflation and

change of value than fulus. Thus, juristic opinions made

on fulus are equally applicable to currencies.

Consequently we can say that, based on this opinion, the

changes in the value of the currency decide the amount

of money that the borrower has to pay and as such, the

borrower has to settle the loan based on the current value

of the currency.

Justification for this opinion:

First, when the early jurists discussed the issue, gold and

silver were the currencies then and as such; no

significant change in their values was perceivable.

However, when a new currency was introduced as

complementary to gold and silver and with trivial

intrinsic value, then some jurists ruled that its value

should be taken into account when repaid in a debt. This

shows that the Fiqhi stand on the matter depends on

whether the currency has an intrinsic value or not, and in

our case, fiat money has no intrinsic value.

Second, if fulus had some intrinsic value and some

jurists deemed their value in debt repayment, then what

does not have an intrinsic value at all, like fiat money,

should by all means be ruled similar to fulus.

Islamic Finance Today - November | December 2016

IFT 50


This is because the absence of the intrinsic value makes

the currency subject to drastic change in value.

Third, when the jurists distinguished fulus from the

remaining gold and silver currencies on the ground that

it was of different nature, fulus was then just a

complementary currency existing alongside gold and

silver, but nowadays our fiat money is the only currency

in circulation. This calls for further consideration of the

value or the purchasing power on this currency in debt


Fourth, the change in value that some of our fiat money

has recently undergone exceeds by far any change in

value to a currency before. This basically means that the

old Fiqh stands on the matter may not apply to our case,

due to the radical change in the conditions of the issue in


Fifth, Verse 2: 279 of the Quran states that a creditor

who repents from usury is entitled to the return of his

“principal” without interest. The verse further states:

“you will do no wrong, and neither will you be done


It is therefore possible to argue that a creditor is entitled

to the return of his “principal”. If the value of the money

he has received as the settlement of his debt is lesser than

the value of the money he has given as a debt then he has

not received the “principal” to which he is entitled.

In conclusion, norms and justice and Sharia objectives

call for fair closure of transactions. If the drastic change

to the value of the debt currency harms both or either

party, then the two parties can seek arbitration to reach a


The matter, however, remains far from Riba since it

relates to the realization of justice and removal of harm;

the very reason for Riba prohibition.

“you will do no wrong,

and neither will you be

done wrong”

51 IFT

Islamic Finance Today November | December 2016


Crypto Currencies

By Sheikh Shafiq Jakhura

In principle Islam recognises Gold and Silver as

mediums of exchange and the jurists refer to these as

“Thaman-e-Khilqi” or a medium of exchange that was

created as such by the creation of Allah. Thereafter, as

modern day paper currencies evolved and they were

backed by gold, they also assumed the same status due

to their being backed by gold.

Once modern day currencies were no longer backed by

gold, and accordingly had no intrinsic utility, but still

maintained widespread global acceptance as a medium

of exchange, they became referred to by the Jurists as

"Thaman-e-Urfi” or mediums of exchange that are held

as such due to widespread overwhelming acceptance.

Accordingly, they assumed many of the same rules as

gold and silver in the rulings associated with the

exchange of gold and silver - i.e. they must be traded on

a cash basis and currencies of the same country cannot

be exchanged for different values as that would amount

to interest. etc.

New Trend

The evolvement of crypto currencies now appears to be

a new trend in the development of money which has not

yet gained the widespread overwhelming acceptance

that conventional money has. The whole issue of

"mining" of this currency is also not at all clear.

Further, tax authorities and legal regulators are still not

yet on the same page as to how these currencies fit into

existing regulations. This being the case, it appears too

early to determine whether these currencies assume the

role of legal tender and a recognised medium of

exchange. Further, there appear to be doubts on whether

those involved in mining or marketing these currencies

are doing so on the basis of a pyramid schemes which

have been deemed objectionable in no uncertain terms

by the Jurists.

Even if deemed acceptable, as a currency is a medium of

exchange and not a commodity in itself, the jurists have

not preferred that such a medium of exchange be used as

a means of one's livelihood as it has not been created for

trading with its own kind.

In fact, Jurists have mentioned that currency should

only be traded with currency to the extent of necessity

whilst fulfilling the overriding rules pertaining to

trading in currency.

Based on the above, it is my considered opinion that we

abstain from pursuing this as a career or trading in this

“currency” until further clarification as to the reality of

this currency is attained.

Trading in Normal Currencies

Currency trading in itself is not against the principles of

Islamic Economics. However, the Sharia has laid down

certain guidelines and regulations when trading in

currencies. It is necessary to uphold and maintain these

regulations when trading in currencies.

The most important of these regulations is that

currencies of different countries can be traded in

exchange of each other provided that the transaction is

completed on spot (i.e. both counter-values should be

exchanged at the same time), irrespective of whether the

contract is concluded at above or below the spot rate. In

other words both the counter-values are exchanged at

one and the same time.

The exchange of both counter values and the subsequent

possession acquired by the buyer and seller thereof,

could take place through actual possession or

constructive possession which is also acceptable. In

order to enlighten you further on this, I quote hereunder

from the Sharia Standards, prepared by AAOIFI:

" 2/6/4. Physical possession takes place by means of

simultaneous delivery by hand.

2/6/5 Constructive possession of an asset is deemed to

have taken place by the seller enabling the other party to

take its delivery and dispose of it, even if there is no

physical taking of possession. Among other forms of

constructive possession that are approved by both

Sharia and business is to credit a sum of money to the

account of the customer in the following situations:

(1) When the institution deposits to the credit of the

customer's account a sum of money directly or through

bank transfer.

(2) When the customer enters into a spot contract of

currency exchange between himself and the institution,

in the case of the purchase of a currency against another

currency already deposited in the account of the


Islamic Finance Today - November | December 2016

IFT 52


(3) When the institution debits - by the order of the

customer - a sum of money to the latter's account and

credits it to another account in a different currency,

either in the same institution or another institution,

for the benefit of the customer or any other payee. In

following such a procedure, the institution shall

adhere to the principles of Islamic law regarding

currency exchange.

A delay in making the transfer is allowed to the

institution, consistent with the practice whereby a

payee may obtain actual receipt according to

prevailing business practice in currency markets.

However, the payee is not entitled to dispose of the

currency during the transfer period, unless and until

the effect of the bank transfer has taken effect so that

the payee is able to make an actual delivery of the

currency to a third party.

Receipt of a cheque constitutes constructive

possession, provided the balance payable is available

in the account of the issuer in the currency of the

cheque and the institution has blocked such a balance

for payment.

Similarly, conventional forward exchange contracts

and purchasing or selling of currencies on the futures

market is also prohibited. These regulations are

deduced directly from the traditions of the Prophet

(Peace Be Upon Him).

One has to be careful in as far as Sharia compliance is

concerned when trading on most web platforms and

markets as the conditions of a valid trade are not

generally adhered to. Many people do not really

intend to buy and take possession of these currencies

and commodities on such platforms. Transactions are

very often speculative and hedge based which do not

always fulfil Sharia requirements.

In addition to this, one should also consider the

following extract from a Fatwa related to Forex

Trading by Mufti TaqiUsmani:

“This is in addition to the fact that the currencies are

originally a medium of exchange and should only be

exchanged for personal use in different countries. To

make them a tradable commodity only for earning a

profit is also against the basic philosophy of Islamic


53 IFT

Islamic Finance Today November | December 2016

55 IFT

Islamic Finance Today November | December 2016


Aristotle and the socio-economics

of 'Islamic money'

By Valentino Cattelan

Associate Researcher

Saudi-Spanish Center for Islamic Economics and Finance (SCIEF), Madrid

Islam and the market

A common misconception about Islamic finance is that

its religious background and ethical foundation implies

an excessive range of operative restrictions for the

growth of the market.

Indeed, Islamic commercial law raises fundamental

issues for all the components of the conventional

financial system, from the banking sector (being the

remuneration through interest on deposits not

admissible due to the prohibition of riba) to the

insurance segment (as insurance is intrinsically an

aleatory contract, thus banned due to gharar); from the

inadmissibility of conventional interest-based bonds,

securities and derivatives to the legitimacy of credit

cards (since the postponement of the balance causes

ribawi effects).

Notwithstanding, in contrast with this seemingly harsh

antagonism towards profit-oriented practices, since its

very beginning Islam has had a positive view about

commerce. The Prophet Muhammad himself, whose

existence represents the model of behaviour for any

Muslim, began his adult life as a merchant, and no

Islamic thinker has ever treated the market itself as

intrinsically immoral or inimical to faith.

Furthermore, the prohibition of riba did not prevent in

any case an exceptional growth of commercial

partnerships (e.g. mudaraba and musharaka) in

medieval Islam, as well as of complex credit

instruments, such as sakk, 'certificate' (from which the

well known term sukuk for contemporary Shariacompliant

financial instruments), ruq'a ('credit note'),

suftaja ('letter of credit', 'bill of exchange') and hawala

('assignment of debt').

How would one explain, then, the apparent

contradiction between a seemingly restrictive Islamic

approach to the market and this flourishing of credit and

commercial institutions?

In this regard, a preferential viewpoint may come from

a careful reflection on 'money' both as the instrument of

exchange and of social interaction in a given

community, and subsequently of 'Islamic money' as its

specific Sharia-based conceptualization.

Islamic Finance Today - November | December 2016

Understanding 'money': some clues from Aristotle

To reply to the previous question, the comprehension of

'money' as economic and social reality cannot be limited

to legal prohibitions, but has to be extended towards a

much broader conception of human interactions where,

far from being only a neutral medium of exchange,

money indirectly mirrors the way in which social

relations are shaped in the mutual participation of

economic actors in the market.

And it is precisely in this sense that Aristotle, in his

Nicomachean Ethics, underlines the etymological

correspondence in Greek language between 'money' as

commercial/market order (nomisma) and 'law' as

natural/social order (nomos), thus highlighting how

both 'money' and 'law' give rise to 'standards, rules',

respectively, for exchanges and social relations, which

are shared by a community of people.

There must... be one standard by which all commodities

are measured... [thus] money has become by convention

a sort of representative of common need [chreia,

'demand']; and this is why it has the name 'money'

[nomisma] – since it exists not by nature but by 'law'

[nomos, 'order'] (NE, Book V, 1133a 29-30)

In addition to the clue to the nature of money as

equivalent to the natural/social order of things/people,

Aristotle offers another important hermeneutical tool

for our investigation when, both in Physics and

Metaphysics, he explains that there are four

fundamental 'reasons' for the existence of things. These

'reasons' are commonly known in the philosophical

tradition as the 'four Aristotelian causes', and namely:

“No Islamic thinker has ever

treated the market itself as

intrinsically immoral or

inimical to faith”

IFT 56


- the material cause, the substance from which

something is composed (e.g. a wooden table);

- the formal cause, the 'model', the 'shape' that it assumes

(four-leg table);

- the efficient cause, the factor giving rise to that

something (the carpenter);

- the final cause, that is to say the purpose for which the

thing has been made (the table has been realized for a

family to have lunch in the house kitchen).

As we are going to see, these 'reasons' offer a valuable

outline of the Islamic conception of money as it can be

derived from classical fiqh and commercial practices in

the Muslim communities of the past, as well as

fundamental guidelines for the understanding of

'Islamic money' in the contemporary global market.

Aristotle's four causes and the nature of 'Islamic


Assuming that not only is money (nomisma) a means of

exchange but it also reflects the order (nomos) of social

relations, one can describe its (1) substance, (2) form,

(3) the 'efficient' reason of prices, and (4) its final

purpose as purchasing or investing power according to a

shari'ah-based perspective.

(1) While classical Islamic law identifies two materials

as money par excellence (gold, dhahab, and silver,

fidda), this does not mean that the employ of other (nonprecious)

substances in the alloy of money was strictly

prohibited: on the contrary, Muslim civilization

experienced since its foundation the widespread usage

of copper as money by 'human convention' (istilah).

(2) Of course, in the social dimension of life, 'Islamic

money' appeared in the form of coins, usually named

after their material (hence, besides the golden dinar and

the silver dirham, extensive use was made of the copper

fulus), whose value as means of exchange was

calculated either by weight (muratala) or by number


(3) Moving from the 'material' and 'form' of money to its

functional employ, which is the (efficient) reason for

which money exists according to Sharia. On the point all

the classical treatises of Islamic jurisprudence agree that

this 'cause' (in Arabic, 'illa) is that money is universally

accepted as means of exchange, as it is the 'value' (qima)

of everything else by representing its 'price' (thaman):

accordingly, money is described as the 'root' (asl) of

prices, or 'the prices par excellence' (al-athman almutlaqa).

Remarkably, money is also metaphorically defined as

'the life of goods' (hayat al-amwal) in the same way in

which food is 'the life of living beings, of people' (hayat

al-nufus): in other terms, its efficient reason in the

market is comparable to that of food, which has been

given generously by God to nourish the good health of

human beings.

(4) It is exactly from this perspective that the purpose

(final cause) of money in an Islamic economy can be

properly comprehended as an instrument to promote

trade (while removing oppression), nourishing the 'life

of goods' (hayat al-amwal) as food sustains the 'life of

people' (hayat al-nufus). Indeed, as rotten food is of no

help for the healthy life of people, so the employ of

'rotten money' has to be prevented in commerce.

Hence, from an Islamic perspective, since riba and

gharar poison the market with unlawful gain, steal

resources and reduce money to a means of individual

enrichment, they must be avoided. On the contrary, the

use of money has to keep its function of 'purchasing

power' for consumption (i.e. as 'price' in the sale) or

'investing power' for production ('capital' to be invested

in the purchase of commodities for an enterprise), in

order to promote 'healthy' profits.

From an exchange- to a human-oriented conception

of the market

In conclusion, which kind of market does 'Islamic

money' promote? Which socio-economic environment

is promoted by the 'reasons' (the four Aristotelian

causes) underlying its nature and function?

“The use of money has

to keep its function

of 'purchasing power'

for consumption or

'investing power' for

production in order to

promote 'healthy' profits ”

57 IFT

Islamic Finance Today November | December 2016


By fostering the nature of money as 'food for goods' (i.e.

to foster consumption and production without detriment

for the others), the Quranic decree forbidding riba (Q:

II:275: 'Allah has permitted trade and forbidden

usury'), although usually read in a restrictive sense, does

display its affirmative stance ('Allah has permitted

trade') in nourishing the function of money by

connecting it to the 'life of people' as participants in a

common enterprise of welfare, in the light of the

principles of the revealed sharia.

In this sense, not only can this proactive role of the

human being as God's agent rectify the misperception of

Islamic finance as it was 'against' the market (from

which this article has started), but it can also properly

display the specific socio-economics of 'Islamic money'

in connection to fundamental principles of risk- and


Hence, 'Islamic money' reasserts the centrality of the

person and of inter-personal relations, not against the

market per se, but against the anonymity and

impersonality of a financial system where 'credit' and

'debt' have been 'commoditized' without being 'backed'

by real economy and an underlying consideration of

community development.

In summary, by re-discovering the functional nature of

money as 'food for goods' to facilitate the 'life of

people', Islamic finance can actually re-orient the

market towards parameters of social inclusion and redistributive

justice from which it departs when the

centrality of the human being is missing as final reason

for the existence of (any) 'money'. And it is in this light

that the nomos of Sharia can transform the nomisma of

the market from a mere sum of exchanges to a fruitful

community of human relations.

Islamic Finance Today - November | December 2016

IFT 58

More magazines by this user
Similar magazines