Daily Vatican newspaper, â€˜Lâ€™OsservatoreÂ Romano, reported that Islamic banking system may help to overcome global crisis, Turkish media reported. The Vatican said banks should look at the ethical rules of Islamic finance to restore
confidence amongst their clients at a time of global economic crisis.
â€œThe 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,â€ the Vatican â€˜s official newspaperÂ OsservatoreÂ Romano said in an
article in its latest issue late yesterday. Author LorettaÂ NapoleoniÂ andÂ Abaxbank Spa fixed income strategist, ClaudiaÂ Segre, say in the article that â€œWestern banks could use tools such as the Islamic bonds, known asÂ sukuk, as collateralâ€.Â SukukÂ may be used to fund the â€œâ€˜car industry or the next Olympic Games in London ,â€ they said.
They also said that profit share, gained fromÂ sukuk, may be an alternative to the interest. They underlined thatÂ sukuk system could help automotive sector and support investments in infrastructure area. IslamicÂ sukukÂ system is similar toÂ bonosÂ of capitalist system. But inÂ sukuk, money is invested concrete projects and profit share is distributed to clients instead of interest earned.
Pope Benedict XVI in an Oct. 7 speech reflected on crashing financial markets saying that â€œmoney vanishes, it is nothingâ€ and concluded that â€œthe only solid reality is the word of God.â€ The Vatican has been paying attention to the global financial meltdown and ran articles in its official newspaper that criticize the free-market model for having â€œgrown too much and badly in the past two decades.â€ TheÂ Osservatoreâ€™ sÂ editor, Giovanni MariaÂ Vian, said that â€œthe great religions haveÂ always had a common attention to the human dimension of the economy,â€Â CorriereÂ dellaÂ Sera reported today.