Tuesday, February 06, 2007

London Islamic bond market

The world's first secondary market for trading bonds which comply with the Koran's laws on earning interest has been set up in London. Islamic law states that the creation of money from money is sinful and therefore forbids interest on loans and deposits. To be shariah-compliant, therefore, these bonds pay coupons from the profits of the underlying business rather than from interest. To my mind, this is rather pedantic. Anyone selling an Islamic bond at a profit would surely be creating money from money? Would Muslims not be able to trade them? The tax treatment also sounds suspicious. At present, the issuer of a non-Islamic bond is able to offset the coupons (ie interest payments) paid to investors against profits. An Islamic bond (also known as a sukuk), however, does not qualify for this relief as profit cannot be offset against profit. Apparently Ed Balls plans to introduce legislation later this year to let them get round that.


Anonymous Anonymous said...

Hmmm... I can see your point, but as with tax evasion vs tax avoidance, it is about obeying the letter of the law, rather than the spirit. This, I'm afraid is a failing of the Catholic faith to my way of thinking. Although when one has Rowan Williams running the Church of England I suppose it is preferable to not going with either the spirit or the letter..

One reason that this blog has captivated my attention is that it deals with God and Mammon in a handy 'one-stop shop'. I would be fascinated by your views on why it is that here in Britain, Christianity appears to be lined up with the 'left-wingers' while in America it is aligned with the right.

You might well think this is 'tosh'. My view really is influenced by 'chapel' rather than church, and that as a working class Welshman, there was still a strong chapel/church going tradition until quite recently. And the C of E used to be quite critical [subtly] of Mrs Thatcher.

However, in the US the Democrats seem to be viewed with suspicion for their views on abortion and so on. This does seem rather odd in the context of the separation of Church and State.

I am not suggesting that you should vote on way or the other depending on faith - this is a rather foolish view.
But some seem to take the parable of the talents as evidence that we should exploit all our skills and assets as far, and as efficiently as we could.
Others seem to view the 'sermon on the mount' as a form of socialist speech.

I think the truth is more likely to be that politicians of all shades view religion as some sort of cloak to put on when it suits them, and put up in the cloakroom when it's inconvenient.

Although in Tony Blair's case, he may think he has 3 different cloaks, until a young boy points out he's wearing none...

7:34 pm  
Blogger Whispering Walls said...

Your comment about the apparent alignment of the Church with the Left in the UK and the Right in the US is (as are all your comments, by the way!) interesting. Would it be fair to say that the Puritan movement took the Church of England to the Left and that before the execution of Charles I the Church was allied to the monarch and therefore on the Right? Of course there's no separation of Church and State here and the Queen is the Head of both and Labour mutterings about turning our country into a Republic clearly have implications for the Church. As you say, the Church believes that all men are equal in the eyes of God which on the face of it is "socialist" and certainly Blake's poem about building Jerusalem in England was warmly adopted by Socialists here.
In the US, where Church and State are separated, the Oath of Allegiance nevertheless contains the words "so help me God". The Republicans traditionally get the votes of the conservative Christians while the Democrats stand up more for minority rights which are sometimes viewed with suspicion by the "Bible voters". It's a fascinating question and difficult to comment on in a few sentences.

9:20 am  

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