Thomas P.M. Barnett :: Weblog

BRIEFING: "Islamic finance: Savings and souls; Muslims have a lot of money to invest. But it is a constant struggle to reconcile faith and finance," The Economist, 6 September 2008.

Islamic bonds are called sukuk. Malaysia pioneers and now Indonesia getting into act.

Even better:

Islamic banks are opening their doors across the Gulf and a new platform for sharia-compliant hedge funds has attracted names such as BlackRock. Western law firms and banks, always quick to sniff out new business, are beefing up their Islamic-finance teams.

Islamic finance now encompasses about $700 billion in instruments. Standard & Poor's thinks the upside is more like $4 trillion. As it is, Muslims are one-fifth of the world's population but possess only 1% of the world's financial instruments.

Disconnectedness defines opportunity here.

Plenty of improvements to be made, and you probably need to expand the preferred cohort of scholars (a mere 15-20) who approve most deals.

Here's the most interesting factoid: Iran has $155b in sharia-compliant assets. Saudis second with 69b, then Malaysia 65b, then Kuwait at 38b, UAE at 35b, Brunei at 32b, Bahrain at 26b, Pakistan at 16b, Lebanon at 14b, and Britain at 10b.

["Faith-based finance: The whys and wherefores of Islamic finance," source is The Banker]

Sukuk issuance grows from about $2b in 2002 to almost $50b in 2007.