Modern Economies and Sharia

M S RAHMAN: Global Islamic financial assets rose to $1.3 trillion in 2012, double the level of 2007, an expansion rooted in consumer demand for products that comply with religious codes. Sharia-compliant financial instruments can't pay or collect interest, due to Islam's proscription of usury; Islamic investments also can't be associated with alcohol, pork, gambling, pornography, or other Muslim prohibitions. Islamic finance surged in recent decades by introducing products that mimic credit cards, savings accounts, and mortgages while avoiding interest. Islamic banks are growing rapidly in countries from Malaysia to Morocco, and even international lenders such as HSBC, Cr�dit Agricole, and Standard Chartered have developed Islamic banking divisions.

The growing pool of sharia-compliant assets is fueling demand for Islamic bonds, or sukuk, issued by corporations and governments, mainly in Muslim countries. Malaysia and Saudi Arabia dominate the sukuk market, but Prime Minister David Cameron's 2013 announcement that the United Kingdom will issue a �200 million ($327 million) sukuk indicates the potential for Islamic finance in global markets. (Short Article)