01 April, 2009
L’Osservatore Romano, a daily newspaper in the Vatican regarded as the mouthpiece of the Pope, has endorsed the values of Shari’ah-compliant finance as a solution to the problems in the world of conventional, interest-based finance. The paper suggested that the ethical foundations of Islamic finance should be adopted by conventional banks as a way of restoring the trust of their depositors and shareholders. It also stated the belief of the Vatican that the Islamic financial system could help the global financial system overcome the crisis.
‘The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,’ said L’Osservatore Romano. The article also quoted a fixed income specialist from Abaxbank Spa, the Italian investment bank of Credem Group, as saying: ‘Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral’. Sukuk, the Shari’ah-compliant alternative to conventional bonds, could finance the ‘car industry or the next Olympic Games in London’. The Vatican has previously been critical of the destructive excesses of the interest-based conventional financial system during the ongoing crisis. The Pope, Benedict XVI, alluded late last year to the illusory nature of fiat money, and the Vatican has also recently been critical of the free market system.
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