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3 H.K. J. Legal Stud. 1 (2009)

handle is hein.journals/hkjls3 and id is 1 raw text is: Islamic Finance: A Religious Solution to Financial Chaos? Ravi Lakhani This article contains an excellent introduction of the principles of Shariah law and its impact on Islamic finance. A discussion on the status of Islamic principles in modern financial systems then follows, with emphasis on how these religious tenets affect the banking systems of Islamic countries via legislation. Despite there being a certain degree of influence exerted by Islamic principles on various financial systems, the author observes that a number of difficulties still lie in the way of integrating religious principles into finance and argues that such an incorporation will require the support of comprehensive legal frameworks. Introduction The implosion of capitalist beacons such as AIG and Merrill Lynch in recent months has prompted Nobel Prize winning economists to liken the current situation to that of the Great Depression.' One only has to revert back to the last Wall Street Crash to see the social and political changes resulting from economic downturns. Most notably, the amount of support received by Hitler's regime showed a positive correlation with the negative economic growth in 1930s Germany. Clearly, reform gains greater acceptance in times of crisis. The president of the European Commission, Manuel Barosso, has even been quoted as calling for a new global financial order. Indeed, it has been suggested that global banking is already entering a new era, away from an inherent obsession with free market.2 On 7 February 2008, the Archbishop of Canterbury delivered a lecture on civil and religious law in London.3 The focus of the controversial speech was the ubiquitous influence of Islamic Law in Britain. However, far from suggesting a dual system, he called for reasonable accommodation of religious values, but within the existing social order and legal system. Moreover, in an interview with BBC Radio 4, the religious leader stated that the integration of certain aspects of Shariah law in Britain has become unavoidable. I propose that the Archbishop's dictum constitutes more than an element of truth, and in the context of global financial systems, Islamic banking requires more than reasonable accommodation. Principles of Islamic Finance Before engaging in a discussion on Islamic finance, it is noteworthy that Shariah is more than just a legal system; it denotes a way of life for its followers, 1 US economist calls financial crisis worst since 1930s, The Economic Times, 19 March 2008. 2 Fraser, S, Wall Street America's Dream Palace (New Haven: Yale University Press, 2008). Williams, R, Civil and Religious Law in England: A Religious Perspective, (2008) 10(3) Ecclesiastical Law Journal, pp 262-282.

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