Articles

Although Indonesia began investing in Islamic finance fairly late compared to other nations, it is making great strides in legislation and capital investments to expand Islamic banking assets.

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As economic interdependence and globalization are ever more expanding, understanding the interest-free system of Islamic banking by banking communities in non-Islamic countries becomes a necessity. This article is an attempt to provide such an understanding by examining the background of Islamic law and Islamic views on banking and finance.

In interviews at the World Bank/IMF Annual Meetings in Prague at end of September, Islamic Banker discussed a number of issues with IDB's President. One of IDB's goals at the meetings is to engage in side meetings with the finance ministers of the 53 IDB member states to review priorities of the members, as well as review and discuss the IDB's constructive program of coordination and cooperation with the World Bank. The IDB does not impose uniform regulations or accounting standards, confining its role to offering technical assistance.

This paper attempts to examine the securitization, negotiability and profitability aspects of three types of mudarabah instruments; namely, asset-enfaced mudarabah instruments, currency-enfaced mudarabah instruments representing monetary contributions and currency-enfaced mudarabah instruments representing real assets.

There are some shared characteristics between the United Nations Convention on Contracts for the International Sale of Good (“CISG”) and Islamic law (shari`a). They both remain largely unknown to American lawyers and contain legal principles that are compatible in many ways.

Money laundering has been characterised as the most serious danger threatening not only the economies of all countries but also their tranquillity and political stability. Despite the theoretical tight regulation and control of banking activities under Islamic law which calls for clean, transparent and ethical dealing_x000D_ which is known to be positive for combating money laundering, there are many loopholes in the Islamic system that might allow underground operations of money laundering to be conducted.

Most of the financing provided by Islamic banks does not conform to the principle of profit-and-loss sharing. Instead, much of the financing provided by Islamic banks takes the form of debt-like instruments. Also, it appears that much of the 'lending' done by Islamic banks is secured this is in violation of a legal prohibition on collateral. This evidence suggests that the claimed benefits of Islamic banking may be somewhat overstated.

Islamic banks in Brunei Darussalam have recently been quite successful in controlling 11.5 per cent of the total deposits in the nation. At this moment, however, they can be categorized as an evolving financial intermediary. Thus, there is a need to complement the existing system with capital markets, as a high proportion of the national savings is placed overseas. The government can assist in providing the necessary push for the advancement to the next phase of capital markets. It is important to keep the 'spirit and flame' growing in the progress of Islamic banking.