The point should be made clear to the French public generally and banking community specifically that Islamic finance is not about Islamic rituals but concerns basic ethical and moral values that are espoused by Christianity, Judaism and other religions. “Islamic banking” may equally well be termed as “Christian banking” or “Jewish banking”.
MOHAMED ISMAIL SHARIFF
The reasons you give for resistance to French Islamic banking are all somewhat valid, but there is no doubt the potential for retail Islamic banking in France is big. I am convinced the regulator will approve it, and the first group with a true retail presence on the ground will be successful. But, this has to be a retail banking effort. There are more than enough potential customers to fill reasonable demand across the country. There is very little available space for any other kind of banking, such as investment banking, capital markets, and the like. Light company banking can be expected for the large Muslim merchant community, but do not expect lots of Sukuk from the French market. The French themselves display a bit of hysteria when it comes to Muslim images, such as the ban on headscarves in school. But by and large they would not resist plain vanilla Islamic retail banking in their midst. There are just far too many Muslims and symbols of Muslim life all over France already. Even here in Geneva we have Christian friends who cross the border into France to buy halal meat. Why the effort? Because halal meat is better! French people buy it, too. JOHN A SANDWICK Islamic Wealth & Asset Management, Geneva, Switzerland
Despite having the largest Muslim population in Europe of over five million, Islamic banking has been slow to develop in France. Skepticisms by French bankers, together with the low socio-economic status of many in the Muslim community, explain the inertia. The political context also presents difficulties, given the civil law environment, secular nature of the French Republic and the Islamophobia of the National Front. Paris has no ambition to be an international centre for any form of finance, a view reinforced by the difficulties facing New York and London during the global financial crisis. Hence the main potential for Islamic finance is at the retail and small business level. This year has seen some positive developments with the Banque Populaire et Caisse dEpargne (BPCE) signing a memorandum of understanding with Qatar Islamic Bank for the distribution of Islamic financial products from its retail branches. Furthermore Al Baraka Bank, which already has a small presence in Algeria and Tunisia, plans to open five branches in France starting 2011. Although these are modest beginnings, Islamic finance clearly has a future in France, but progress will take time.
PROFESSOR RODNEY WILSON Director of postgraduate studies, Durham University
Any global Islamic financial institution will be competing with conventional banks, regardless of where they are based and therefore this is not a challenge that is unique to France. Islamic financial institutions operate after all within the global financial industry. Resistance towards change and general public fear are additional components any new company or new industry will have to manage carefully, and is not purely the prerogative of Islamic financial institutions. Much of the fear surrounding Islamic financial institutions is related to a lack of knowledge. This can be a dangerous thing and any resistance as a result of this can be managed and taken away by the banks. It is their responsibility to ensure the general public understands the underlying principles and becomes comfortable with these banks. Open and honest communication, not just to potential clients, but also to the general public is likely to dispel any misconceptions that may exist.
DR NATALIE SCHOON Head of product research, Bank of London and the Middle East
We must persistently educate and change the misperceptions and fears through engaging in debate, discussion and sound reasoning. DAUD VICARY ABDULLAH Managing director, DVA Consulting
There is no magic formula for overcoming resistance to allowing Islamic finance to emerge and thrive in any country, whether it is predominantly non-Muslim like France or predominantly Muslim like Egypt. Each country has its own barriers, whether from current political dialogue to historical politics or factors entirely unrelated to politics, like a population that has become secularized and therefore feels little reason to choose Islamic finance over conventional finance. However, with the undercurrents of current global politics combining with a secular state like France and tensions between the native non-Muslim population and more recent Muslim immigrants, France is likely to remain a challenging region for Islamic finance. One example that may be instructive for France would be Turkey. Although there is a much larger percentage of the population in Turkey who are Muslims, it shares a historical bias towards secularism in government. The Islamic finance industry in Turkey is still small, but it has been around for many years despite the conflicts between official secularism and private religiosity. One of the ways it has done so is to move away from the “Islamic” label for Shariah compliant financial products. Instead of Islamic banks it has participation banks, which has provided the government with some ‘cover’ for regulations that level the playing field between conventional and Islamic banks. If the Islamic financial institutions wishing to enter the French market were to adopt a similarly neutral term, along with efforts to educate the public, it could help smooth the way for the industry to develop a new market in Europe.
BLAKE GOUD Principal, SharingRisk.org
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