Banking on choice

The existence of international Islamic financial centers (IIFCs) is crucial to the growth and evolution of the Islamic banking and finance sector. If a locality is to be an IIFC, it must have a good standard-setting organization to set down rules, a merged shari'a board, accounting standards that are applied on all institutions, an evolved capital market, a lender of last resort, a money market consistent with shari'a, a check-clearing arrangement for Islamic accounts, good banking- and commercial-law systems, an abundance of participants and funds in the Islamic sector, political safety and stability, a sizable regional market, and deal securitization. Although Manama, Kuala Lumpur, and London have been named as possible IIFCs, none of the three cities meets the listed standards of an Islamic financial center. London can at most operate as a niche-market center. The dedication of the Bahrain Monetary Agency to Islamic finance is questionable. Malaysia lacks reciprocity capabilit