Jun 19 2011 |
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Missing the point
By John Foster As we report this week, the volume of calls is intensifying for the creation of a supreme Shari'ah council that will oversee all Islamic finance products in the GCC, with the latest figure to step up to the megaphone stand being the eminent Dr. Hamed Hassan of Dubai Islamic Bank.No doubt we will see in the coming months more top scholars from the Gulf and a bevy of senior bankers echo the calls made by Hassan and the others in these past few weeks. In principle this seems like a great idea and since the emirate of Dubai started the initiative in 2009, has gained supporters in and scholars from Qatar, Saudi Arabia, Kuwait and the UAE. The initiative has not been as warmly received in Bahrain, which many consider as already being the de facto leader of the GCC nations in terms of Shari'ah compliant banking and the region's Islamic finance hub. A number of people operating in Bahrain that I spoke to - off the record - back in '09 thought in principle that a united Shari'ah board was a good thing. But they also saw it as Dubai brazenly trying to wrestle some large part of the regional Islamic finance sector away from Bahrain and install it in Dubai, following what they argued was the emirate's much-publicized failings to set itself up as a regional financial centre with global clout.
No one doubts that there is a need for improved regulation and the streamlining of cross-border issuance of, for example, Sukuk. However, what the industry needs more is global standardization, not just standardization across the GCC, which is already very homogenized in its regulatory and Shari'ah regimes. The initiative - which does deserve some applause - does however run the danger of becoming a noisy sideshow, when the real challenge lies in finding a global language for Islamic finance - not creating another regional hub 300 miles away from one of the global centers for the industry. With emerging markets in Africa and Central Asia coming to the Islamic finance party, the industry needs one coherent voice - one leader - not three disparate voices calling from different directions.
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