Daily Vatican newspaper, L’Osservatore Romano, reported that Islamic banking system may help to overcome the 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.
The 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, the Vatican’s official newspaper Osservatore Romano said in an article in its latest issue late yesterday. Author Loretta Napoleoni and Abaxbank Spa fixed income strategist, Claudia Segre, say in the article that Western banks could use tools such as the Islamic bonds, known as Sukuk, as collateral. Sukuk may be used to fund the car industry or the next Olympic Games in London, they said.
They also said that profit share, gained from Sukuk, may be an alternative to the interest. They underlined that the Sukuk system could help the automotive sector and support investments in the infrastructure area. Islamic Sukuk system is similar to bonos of the capitalist system. But in 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 money vanishes, it is nothing and concluded that the only solid reality is the word of God. 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 grown too much and badly in the past two decades. The Osservatore editor, Giovanni Maria Vian, said that the great religions have always had a common attention to the human dimension of the economy, Corriere Della Sera reported today.