A leading British economist sees a vital role for Islamic banking in international finance.
Sir Howard Davies, director of the London School of Economics and Political Science (LSE), said in Bahrain on Sunday that Islamic Banks should be integrated into the international banking system.
"Islamic banking should be mainstreamed into the international
system. What needs to happen is to encompass both systems ... Having two sets of rules, one for conventional banking and another for Islamic banking, will not do it," Davies told reporters on the sidelines of the 10th World Banking Islamic Conference taking place on Sunday and Monday in the Gulf island state.
Davies said he believed the problem was that the international
standard setters pay little attention to Islamic banking.
"Up to now the international environment, the framework of rules within which each country must try to situate itself, has largely been developed without reference to the needs of Islamic banking."
The LSE director said he believed that "miscommunication is
largely due to the fact that the Islamic banking community is not represented in the Basel Committee, the global organization based in Switzerland, which sets banking standards."
Davies called for a "dialogue" between the international
standards setters and the leaders of the Islamic banking community, saying that the time the Basel Committee has spent on Islamic financial issues is "short".
"The committee is of a rather curious composition, it is not
representative of the global financial system and it is time it is
changed because it is too heavily European dominated," he said.
"If Islamic organizations keep talking among themselves, they
will not be successful."
According to Fouad Shaker, secretary general of the Union of
Arab Banks, there are over 265 Islamic financial institutions in the world with capitaliztion in excess of $13 billion and assets
of over $262 billion.
Their financial investments exceed $400 billion and deposits are in excess of $202 billion.