News Column

Centralised Sharia boards key to growing markets

July 11, 2014

Gulf News



The emerging global Islamic economy needs a more powerful Islamic financial industry, but for decades the Islamic banks and financial markets have suffered from poor liquidity and a lack of an effective global central clearing house for Islamic bonds. In large part, this has been because each Islamic financial institution has its own Sharia board, which can set its own Sharia conditions for its offerings to the markets, which requires institutions to check with their own boards on the Sharia status of any new offering before taking part. There are no worldwide standard Sharia requirements, which hinders the development of Islamic finance.

Dubai is working to become a hub of the Islamic economy, and it is making a useful contribution to how the markets might be made better. If there was one centralised Sharia board that set the Sharia terms for all institutions under its jurisdiction, the markets would be more effective.

Such an innovation would be a massive task to establish at a global level, but it is possible to start at a more local level, which is why it is important that the Dubai International Financial Centre is considering creating a single Sharia board in order to widen the acceptability within its jurisdiction of any Islamic institution's offerings and so help deal with the liquidity problems created by every institution having its own Sharia board.


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Source: Gulf News (United Arab Emirates)


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