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April 23, 2014 / 23 Nisan, 5774
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Posts Tagged ‘financial services’

Britain: ‘A World Capital for Islamic Finance’

Thursday, October 31st, 2013

Originally published at Gatestone Institute.

The London Stock Exchange will be launching a new Islamic bond index in an effort to establish the City of London as one of the world’s leading centers of Islamic finance.

Britain also plans to become the first non-Muslim country to issue sovereign Islamic bonds, known as sukuk, beginning as early as 2014.

The plans are all part of the British government’s strategy to acquire as big a slice as possible of the fast-growing global market of Islamic finance, which operates according to Islamic Sharia law and is growing 50% faster than the conventional banking sector.

Although it is still a fraction of the global investment market — Sharia-compliant assets are estimated to make up only around 1% of the world’s financial assets — Islamic finance is expected to be worth £1.3 trillion (€1.5 trillion; $2 trillion) by 2014, a 150% increase from its value in 2006, according to the World Islamic Banking Competitiveness Report 2012-2013, published in May 2013 by the consultancy Ernst & Young.

But critics say that Britain’s ambitions to attract investments from Muslim countries, companies and individuals are spurring the gradual establishment of a parallel global financial system based on Islamic Sharia law.

British Prime Minister David Cameron announced the plans during a keynote speech at the ninth World Islamic Economic Forum, which was held in London from October 29-31, the first time the event has ever been held outside the Muslim world.

“Already London is the biggest center for Islamic finance outside the Islamic world,” Cameron told the audience of more than 1,800 international political and business leaders from over 115 countries.

“And today our ambition is to go further still. Because I don’t just want London to be a great capital of Islamic finance in the Western world, I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world.”

Cameron said the new Islamic bond index on the London Stock Exchange (LSE) would help stimulate fixed-income investments from Muslim investors — especially investors from oil-rich Persian Gulf countries — by helping them identify which listed companies adhere to Islamic principles.

Investors who practice Islamic finance — which is said to be structured to conform to a strict code of ethics based on the Koran and Sharia law — refuse to invest in companies that are linked to alcohol, gambling, pornography, tobacco, weapons or pork. Islamic finance also forbids collecting or paying interest and requires that deals be based on tangible assets.

Unlike conventional bonds, sukuk are described as investments rather than loans, with the initial payment made from an Islamic investor in the form of a tangible asset such as land. The lender of a sukuk earns money as profit from rent, as in real estate, rather than traditional interest.

Cameron says the British Treasury will issue £200 million (€235 million; $320 million) worth of sukuk as early as 2014. The objective is to enable the government to borrow from Muslim investors. The Treasury plans to issue fixed returns based on the profit made by a given asset, thereby allowing Muslims to invest without breaking Islamic laws forbidding interest-bearing bonds.

The Treasury also said some sukuk bond issues may require the British government to restrict its dealings with Israeli-owned companies in order to attract Muslim money.

Although Britain has already established itself as the leading secondary market for sukuk — the LSE has listed 49 sukuk bonds worth $34 billion during the past five years — such bonds have rarely been issued from local firms and never from the government.

“For years people have been talking about creating an Islamic bond, or sukuk, outside the Islamic world. But it’s never quite happened,” Cameron said. “Changing that is a question of pragmatism and political will. And here in Britain we’ve got both.”

According to Cameron, this “pragmatism and political will” is being influenced by the fact that Islamic finance is “already fundamental” to the success of the British economy. Indeed, it is.

Britain is already the leading Western center for Islamic financial and related professional services. It is a leading provider of Sharia-compliant finance, with reported assets of $19 billion, according to Islamic Finance 2013, a new report published by The City UK, a financial sector lobby group.

The Best Way to Use Your Money to Help Others

Wednesday, December 19th, 2012

When you make a charitable donation, do you just mail a check and forget about it, or do you care how the organization uses your donation?

How can you best ensure your hard-earned funds are being properly used by a charitable organization? While it seems to make sense that organizations use their money wisely, how can the donor be sure the organization is putting donations to the best possible use?

Rabbi Uziel Admoni of Charity Safebox spoke with me on the Goldstein on Gelt show about some of the challenges donors face when they wish to help a specific organization.

First of all, it’s always a good idea to check the credentials of a charity before you give and make sure it is really genuine.  Is it important to you if the organization has a tax-deductible status?

However, even when the charitable cause is genuine, the money that you are donating may still not necessarily go to the right place due to downright inefficiency. Charities are run by idealistic people, but are they also business-minded?  Even though the directors may be honest and hardworking, they may still not be putting the donations to the best use. They may be doing great work – but with a little business or financial guidance they could be doing even better.

I was once involved with a donor who sponsored the purchase of several hundred library books for a school in Israel.  Months later, the donor arrived at the school expecting to see a fully-stocked library (or at least the empty shelves if the students checked out all the books).  They were disappointed to find cartons of books sitting in the corner.  They were told, “We bought the books with the money you gave, but had no money to build bookcases.”  Needless to say, the donor was shocked that they hadn’t approached him earlier, for he surely would have sponsored bookcases too!  After all, without them, his donation was useless.

For this reason, if you are thinking of making a significant donation to a particular organization, consider employing the services of a family office to oversee the donation. A family office carries out due diligence into the activities of non-profit organizations on behalf of the philanthropist. This work is extremely useful to both the donor and the recipient. The donor has peace of mind of knowing that the money given is being used for the intended cause in the best possible way, while the charity gets a chance to efficiently further its mission.

Indeed, this was the happy ending of the library story.  The donor hired a family office to oversee the library, from the construction of bookcases until the books reached the hands of the students.

Printed from: http://www.jewishpress.com/blogs/goldstein-on-gelt/the-best-way-to-use-your-money-to-help-others/2012/12/19/

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