January 31 this year, I Islamic Banking and Finance held a conference in London attended by Euromoney. In response to a question from the audience, noted a scholar panel, "We welcome constructive comments, but there are some people who just want to be destructive, and we ignore it." He later said: "Muslims need to finance housing and car finance?" With obvious implications not believe that their critics.
Consciously or not, it is a misleading claim, Islamic finance scholars faced the inner circle. And each of us has the right to develop his economic theory, when the "Islamic" label to other expert opinions should be lightly dismissed. Islamic banking and finance sector, not the schoolyard can be a monopoly on football. It is a pet intellectual who belongs to a group of people.
Since most of the world are now commonplace, perhaps even sees as necessary usury, Islam, religion and ideology, which once banned the last line of defense between them. If Muslims really are free of usury fails to promote financial outlook, some will do it. Unfortunately, we take the secular world of business and politics in the crowd passed with Islamic law and institutional arrogance almost casual clothes are the key issues. This is what is so dangerous and political institutions in shaping national laws and force are the two least desirable. It is their union, the nearly 300 years of modern interest-based monetary system in London, gave rise to. Orange William of power, money, monopoly, like bank lenders wanted their building was called the Bank of England.
It is clear that powerful forces are trying to overturn a ban on Islamic usury is now at work. In many cases, their tactics of those who were deployed throughout the Christian world are the same. In the late Middle Ages and early Renaissance, the Scholastics "retrovenditio" (Al-Bay 'Islam known as INA) argue against. The one bottle of wine, a wine, a few months later (a practice that has to do with the way RIBA AL NASA) has banned the movement of a bottle, the wine becomes more valuable as are mature. Church scholars such contracts usurious recognized as a latent form, but the three acceptable (Contractum Trinius ") contract, which ultimately lost through a combination of usurious interest loans were built. The door through which traders borrow money at interest in the Christian world came to train every day, and 'murabahah want - buy - official "practice in the Islamic world was created.
The distinguished historian Matthew Paris 1235CE tender documents, which describe the borrowed money to usury, the one living under biblical law find a way to preserve the appearance of Bishop. Moneylenders were lending to the bishop, Paris writes: "... the work around their needs, cloaking their usuries fairs, and do not know what is added to the principal drama whatever the name of usury is said to need. Usuries exhibition masking their? Depressing familiar ways.
A few years ago that sometimes develop a commercial banking system where money Pundits Michael Rowbotham, heard. Although they do not believe that interest should be banned, meaning of Michael's work was a sign of hope because of his work on monetary system is essentially correct. Just as I believe that the business model of commercial bank money nothing (fraud) out of creating and interest (RIBA), including debt later. Muslims contract system, the monetary policy framework has been damaged in this way to focus on narrow issues, Islamic finance is used to ensure failure. Islamic finance with non-Islamic banks could fail.
In this context, an important issue no one, neither man or a financial institution a promise that should be impossible to maintain. £ 100 cash in the bank following a request from the client promises to pay, the bank is £ 100 in cash for the promise that the customer must meet the requirement. Not in the modern commercial bank. For example demonstrates HSBC's 2006 annual report that some of our customers in terms of total deposits 150,000,000,000 million, but HSBC 3.5000000000000 pounds cash kept only for these contributions to cancel the request respect. If any HSBC cash the same day asked for his money, HSBC will be forced to close their doors.
Gharar a classic case is the practice fractional reserve. It is wrong, which is the core of commercial banks. Borrowed money that they keep in sight to the depositors of commercial banks to increase money supply. Also, interest income, which of course is the whole point of exercise can increase as a part of the process. Inflation, debt and forced economic growth, as Michael Rowbotham seen our economic environment as a result of this practice has been characterized.
In the West, long-term policy rather than control of a system of fractional reserve was abandoned. Of their lack of reserves against deposits of commercial banks since gharar practice, central bank action "lender of last resort", so special provisions are available to those offered in times of need. Depositors and banks in advance, promising to deposit a percentage of their profits, whatever happens, they must meet capital adequacy ratio paid by the RIBA practice. These require that each bank to hold capital to cushion the poor performance of loan portfolios from banks to protect depositors.
Little thought to inform us that the last resort function and many other features of modern banking landscape as capital, lenders will apply to be a result of Sharia. That is why it is so utterly hopeless to get the Muslim leaders and scholars in Islamic banking is a system that claims to the methods. At a conference in London for an "Islamic debt market" proud to announce the progress was, and International Capital Market Association, with "close ties" Bank of International Settlements approval of the framework. Our leaders see that the structure with which this can lead to the scope of usury does not seem to integrate. its Islamic equivalent of trying to invent equally absurd to try to create an Islamic con. We do not have a dream that our land of Islam tree can be, and that of course will grow a rich harvest of fruit? Interest in the real estate market based on the wealth effect is well known in many countries. The average home price in the United Kingdom in 1963 was 3.160 pounds. Ten years later it was 9,942 pounds, ten years later, 26 471 pounds, and today about 200,000 pounds. These conditions all but the most revenue for the company is impossible under a house trying to save. We, when we reach our goal of saving the rest, the house price is double or triple. In these cases the only viable option to borrow money to buy a home. But the money borrowed from the bank's newly created money, and when the money is injected into the housing market, property prices are rising. Handling, which allows a person to buy a home, house prices due to another person is unacceptable. This is a terrible trap, one that "Islamic" mortgage solution, because banks make money from something to offer them. We need a solution to housing finance by promoting Islamic mortgages, our problems worsen only in the long run.
Model Home Finance I have supported over the last decade or so, the purchase of real estate financier and the customer buys the rest. These two parties own the property as partners, and then rent it to tenants. Tenant, in most cases, home buying process customers. Over the years, customers can buy real estate financier of interest and if they pay the market value of shares bought. But customers do not need to buy a share of the financier, and this important feature because it means that the customer is in debt to the financier. Partnership at the end, the customer has purchased all the financier interest, the home sale on the open market and sell their shares at the time of the relationship among the partners. In this structure, the customer will never be taken over by the financier, since it can never be in debt to the financier. Not only "negative equity" position, which is often found in interest-based mortgages may find themselves in, the property value of the property exceeds the debt. The financier owns 80% of the property and the property's value drops nothing, nothing financier owns 80% of the customer with a single penny for it not compensate.
Imagine that this product is available today in the West Country. In Britain or the U.S. people knew there was a way to buy a home and not in debt, millions of them go for it.And they saw that it was Muslims who give them such a solution is certainly more than many people believe in Islam was. But almost all "Islamic" mortgage products available today that equity from banks and interest-based credit risk is transferred to the customer. Bank lending to customers, and interest-based loans are. Monthly cash flow is equal to or interest-based loans are over. In many cases the cause variable rate mortgage interest payments on rental rates, as unexpected as it may be linked to Libor. And in default, the client their negative equity position, interest-based loans and May It's no surprise that non-Muslims hear the principles of Shari `ah, and then to its implementation is what we have to fake the will?
So I think that Muslims need to finance the house. That's just my way as it is consistent with the spirit and tradition of our religion, as Islamic banking methods normally used. And I'm not alone in my feelings. I have many financial managers who are equally frustrated to speak. They include feelings of guilt ("I think I just worked on the Manhattan project, to think and I sorry that I helped") ("LLL fun of these units largely hypothetical, and I still can not believe that leading researchers have adopted Sharia compliant products), and hostility ("... I Islamic finance practice, and I) hate it."Such an activity just after industry comments can not be ignored. It is clearly a major problem.
It is well known that Islamic banks late payment of installments due under the contract murabahah can not be charged. We also know that the money was approved by some researchers tawarruq. Here deferred payment against a customer buys goods for delivery now, immediate payment in cash in the market for goods at a lower price sells. Bank of objects through various dealers offer both transactional and type of imagination to say that their client's merchandise. Is the essence of the transaction, of course, that client banks lend money at interest. But while the penalty for late payment of debt collection is prohibited in any sense, and here's why tawarruq Islamic banking in the words of advice, "we were told that late payment by customers of banks state may charge penalty interest. So we pay again late in the contract with the customer by entering murabahah tawarruq financed in this way, actually a bank penalty, received .. "
Most of these processes depends largely on the establishment of legal contracts is a combination. Loans, pledges and donations to halal, Shari `ah point of view of each, but its combination of easy money" more money now, later "can do business. A scholar such transaction is allowed, but the combination of two Halal transactions produce exactly the same result "murabahah want - buy -. Official" First hand, why be viewed as a form of RIBA, and the other not? The spirit of the Shari'ah is broken by a combination of contract, so it was a letter of the law practice benchmarking is broken. In many modern leases relating to rent to tenants for Libor interest rate. Since LIBOR for a period to the beginning of the period is not known tenant in the building do not know what you can rent for use in future periods to be paid.
