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TRANSCRIPT
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About the Lecture
Most people still think that money is backed by some real asset. There is still a lingering feeling that somehow there is a backing of gold reserves for currencies. Many are familiar with fractional reserve banking through which banks were able to create new loans representing a multiple of customer held with them. However, few people are aware that money creation has moved far beyond fractional reserve banking. Commercial banks are literally authorised to create money at will. All such moneys created are as a result of credit advances. Once this basic process is understood, it becomes clear that credit creation is at the heart of the contemporary monetary system.
In other words debt is integral to the monetary system. In such a system one can easily see the challenge of introducing a risk-sharing paradigm which is supposed to be at the heart of Islamic Banking and Finance. The compromises needed to skirt around this fundamental dichotomy leads to products which are essentially Shari’ah wrappers on conventional debt-based structures. This has led to much disillusionment with Islamic Financial products.
The lecture seeks to highlight this dilemma for Islamic Financial Institutions and throw some light on possible pathways to preserving the authenticity and integrity of Islamic Finance.
About the Speaker
Mohammad Iqbal Asaria teaches post graduate courses in Islamic Finance, Banking and Insurance at several leading universities including CASS Business School London and Bangor Business School at Bangor University in Wales, United Kingdom.
Iqbal is the co-author of the Chartered Insurance Institute’s module on Takaful. For the last eleven years Iqbal has been the convenor of the annual International Takaful Summit and is amongst the leading thought leaders in the Takaful industry. He has advised several financial institutions in the UK and overseas on Islamic financial services.
Iqbal was a member of the working party set up by the Governor of The Bank of England to look into issues relating to the introduction of Islamic financial products in the UK. He was previously a resource person on International Financial Institutions and GATT/WTO for the Third World Network and provided specialist advice on International financial flows, multi-lateral lending and international trade (1985 – 1995); and served as Chairman of the influential World Bank – NGO Committee (1985 – 1990). Since 2005, he has been Special Advisor on Business & Economic Affairs to the Secretary General of the Muslim Council of Britain. He is a Fellow of the Chartered Association of Certified Accountants. He was awarded the CBE in the 2005 Queen’s honours list for services to international development.
The Process of Money Creation by Commercial Banks and its Implication for Islamic Financial Institutions
Date: Thursday, 19th April 2018 Time: 6.15pm
Speaker:
Mohamed Iqbal Asaria, CBE, MA Econ, FCCA
Help ye one another in righteousness and piety
The Holy Qu’ran 5:2
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Venue:EY1 More London Place, LondonGreater London, SE1 2AF (MAP)
Chair:
Richard de Belder Former Global Head of Islamic Finance, Dentons