Edited by M. Fahim Khan and Mario Porzio
Chapter 16: The Riba Prohibition and Payment Institutions
Vittorio Santoro The legal framework would not be exhaustive without considering the up-to-date Directive 2007/64 EC (OJEC of the 5.12.2007, L 319/1), which will be amending national banking laws not later than November 2009. Some European countries have already implemented it (for example, the United Kingdom and France), while some others, like Italy, are still at the preliminary stages. The Directive has provided for the ‘payment institution’ (PI),1 a new financial intermediary authorised to perform, as well as credit institutions and post offices, payment services throughout the European Community (Mancini and Perassi 2008). We wish to offer some comments on payment institutions discipline and the riba prohibition in order to assess the kind of legal obstacles Islamic intermediaries can meet. THE PREMISE OF THE EUROPEAN DIRECTIVE 2007/64 EC The Directive results from a public debate between European institutions, the Member States regulators and the banking associations, which has seen the launch of the Single European Payment Area (or SEPA). Such a project will attempt to create an area within Europe in which companies, citizens and other economic players can receive and make national and trans-border transfers of funds in euros under the same legal and economic conditions, regardless of their location (EPC 2007).2 Furthermore, the same project will deal with competition issues: the European Commission revealed a stand-still oligopolistic banking position on the European market of payment systems which makes the adoption of a single currency less efficient.3 Indeed, as the anti-trust analysis has stressed, both technical and...
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