Islamic Banking and Finance in the European Union
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Islamic Banking and Finance in the European Union

A Challenge

  • Studies in Islamic Finance, Accounting and Governance series

Edited by M. Fahim Khan and Mario Porzio

This timely book examines the authorization of Shari’ah-compliant intermediaries as either credit institutions or as investment companies in the European Union.
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Chapter 1: From the Poor to the Merchant

Umberto Santarelli

Extract

1. From the poor to the merchant Umberto Santarelli INTRODUCTION When one considers the comparison between Islamic banking and European banking law, it is impossible to ignore the range of different issues which arise from the complex historical context. Indeed, the precedent in itself does not make any difference, but in every legal tradition, the origins (historical or more recent as they may be) can never been forgotten without making hermeneutical and misleading mistakes. Going back to the origins, it is possible to trace the rationale and function (and, consequently, a coherent system of rules) of Islamic banking institutions in Europe today, whose binding rule is, according to their statutes, the proscription of usury. Indeed, such a rule seems to prevent Islamic banking institutions from performing banking activities in those legal contexts such as the European framework which seem to have released themselves not only from complying with, but even from remembering, such an ancient legal proscription. This chapter tries to verify whether the existing legal system is consistent with the proscription regarding usury; namely, reformulating the question so as to ask whether such a proscription belongs to the genetic heritage of our (European) legal order. It might represent the preliminary issue and, if the right solution is found, the following substantial problems can be addressed in the correct way. Dealing with substantial issues entails ascertaining the uniformity of the Western legal framework with the proscription of usury, as posited above. THE ORIGINS OF USURY Usury has ancient origins, being...

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