Towards a Plural Financial System
Studies in Islamic Finance, Accounting and Governance series
Edited by Valentino Cattelan
Chapter 7: The economic impact of Islamic finance and the European Union
There has been a wide expansion of Islamic finance in recent years. According to TheCityUK, the total Shari‘ah compliant assets of the Islamic finance industry were valued at $1.04 trillion by the end of 2009, representing 10 per cent more than at the end of 2008 ($947 billion). Banks represent the vast majority of these assets with 83 per cent, the rest being 11 per cent in sukuk issues, 5 per cent funds and 1 per cent of other. These figures might look impressive at first glance, but Islamic finance still represents less than 1 per cent of the world finance industry. When considering the European Union (EU), the main country involved in Islamic finance is still the UK, having the first Islamic banking industry with 22 banks providing Islamic financial products of which five are fully Shari‘ah compliant. However, France is potentially a very important market for Islamic finance as it has the largest Muslim population in Europe and recently implemented a series of tax and legislative changes to facilitate the introduction of Islamic financial products. In 2010 one Islamic bank was created in Germany and Islamic finance activities could be observed in Luxembourg and Switzerland.
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