U.K. the Global Center for Islamic Finance?
Gordon Brown supports development of 'Shari'a-compliant finance'

Gordon Brown, England's chancellor of the exchequer, has stated that he wants to make Britain the global center for Islamic finance. The chancellor said the Labour government will continue to implement the "tax and regulatory reform to support the development of Shari'a-compliant finance."

Addressing business leader at a conference organised by the Muslim Council of Britain on Tuesday, Brown said, "Entrepreneurial vibrancy and dynamism of Britain's Muslims, combined with Britain's openness to the world and the historic ties with Muslim countries, that makes the ambition to make Britain the gateway to Islamic finance and trade a realistic and realisable ambition."

Ahmed Mohammed Ali, president of the Islamic Development Bank, also present in London, welcomed the chancellor's openness to Islamic finance.

"London has traditionally been a major center for structuring and arranging Islamic finance since the 1980s," said Mohammed Ali. The president of the IDB underlined the important support of the Financial Service Authority, Britain's banking watchdog, which authorized in 2004 the complete inclusiveness of the Islamic Bank of Britain in the UK banking system.

Analysts in the city of London appreciated Brown's move to grab a slice of the Islamic financial market, which is estimated to be around $400-$500 billion.

"Brown's position and reform implementation is good news for the banking sector," said Amy Waldron, spokesperson for Lloyds TSB, a British bank that will launch on Wednesday a range of Islamic financial services in all its UK branches.

Muslims and non-Muslims living in Britain will have the possibility of opening
current accounts and get mortgages for their house in compliance with their religious faith. According to Shari'a law "interest" or "usury," known as riba, is banned.

"As a matter of faith, a Muslim cannot lend money to, or receive money from
someone and expect to benefit," states the Islamic Bank of Britain on its website. "To make money from money is forbidden - - wealth can only be generated through legitimate trade and investment in assets."

A bank which offers Islamic current accounts cannot charge interest and savings will
not be invested in industries and stock markets. For Islamic mortgage, banks pay up to 90 percent of the house cost and then charge the customer a monthly rent to repay the money borrowed.

"Instead of lending money the bank buys the property for the customer," said Paul Sherrin, head of Islamic Financial Services at Lloyds TSB. The interest rate is embedded in the "rent payback system" said Waldron, but in this way the client of Muslim faith is not going against the financial laws set by his religion.

The total Muslim population in Britain is over 1.6 million according to the Office for
National Statistics and recent research led by Lloyds TSB show that over 75 percent of British Muslims would prefer a banking system that conforms with Islamic laws rather than adopting Western financial services.

Sherrin said, "Having spoken to Muslims across the country we know that more than three -quarters want current accounts and mortgages that fit with their faith. By making these products available nationwide we're bringing Islamic banking into the mainstream and we're giving the Muslim community access to financial services that meet their needs without compromising their religion."

However, to satisfy the growing demand for Islamic finance in Britain, banks have started a talent battle to hire internationally renowned and financially literate Muslim scholars as advisors to the emerging Islamic banking business.

Humayon Dar, managing director of the London-based shari'a consultancy Dar Al
Istithmar insitute, told the Financial Times that there is a real shortage of qualified
Imams and scholars who can issue fatwas (religious edicts) that are trusted by Muslim citizens. "There are perhaps 150 [such scholars] worldwide who are involved with Islamic finance but only 20 are internationally recognized," says Dar.

In the UK several prominent banks, including HSBC, Citigroup, Barclays Capital, Lloyds TSB, Deutsche bank, BNP Paribas and Standard Chartered, have hired Imams and Muslim scholars as consultants for their Islamic financing branches.

Ekmeleddin Ihsanoglu, secretary general of the Organisation of the Islamic conference, which represents over 1.2 million in the world, commented positively the effort of Western banks in addressing financial concerns of Muslim devotees. "The OIC would be more than happy if Islamic finance products became available outside the borders of the [57] member states," he said.

The secretary general of OIC added that the increased economic and trade commitments between the West and OIC member states "will open a whole new avenue for the cooperation and engagement of the West with the Muslim world to promote peace and dialogue at the time when misunderstandings, misrepresentation and defamation of Islam is on the rise."