Financial Services Newsletter, July 2008

Islamic Finance

The Prophet, said: "Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt - like for like, equal for equal, and hand-to-hand; if the commodities differ, then you may sell as you wish, provided that the exchange is hand-to-hand."

Introduction

A growing market in a number of different Islamic states has increased the demand for financial institutions to harmonize with Sharia law. The need for restructured investment policies adapting to Islamic law can be dated back to 1963, where Ahmad El Najjar was the first Muslim to experiment and develop a banking system based on profit sharing. At present numerous countries in the world, including Gibraltar, are implementing laws that conform to Islamic law and this I intend to discuss further below.