Islamic banking needs to break out
The Shariah-complaint finance sector has been growing strongly, but only in a few jurisdictions and with limited product diversity. As oil-derived liquidity flows dry up in its core markets in the Gulf, what can it do to fix its lack of international reach?
by Dominic Dudley
Sometime later this year Qatar International Islamic Bank is hoping to gain a licence in Morocco for a new bank that it is setting up in a joint venture with the local CIH Bank. It is just one small part in a wider story of Islamic banks gaining footholds and expanding. Among other recent converts to the cause is Oman, which began to issue Shariah-compliant banking licences in 2012.
It is not just a trend in Muslim-majority countries. In Europe, the Bank of England issued a consultation paper in February on the feasibility of establishing a Shariah-compliant liquidity facility. Such developments create the impression that Islamic banking is starting to make headway in the global banking system.