Crisis-ridden Europe can learn from Islamic finance, says Luxembourg Finance Minister

KUALA LUMPUR: Europe can learn and gain from Islamic finance, given that financial institutions under it, have remained stable against the backdrop of the eurozone debt crisis.

Luc Frieden

This observation was made by Luxembourg’s Minister of Finance, Luc Frieden in a keynote address at the IFN 2011 Issuers and Investors Asia Forum here yesterday.

Frieden said despite the credit crunch that had impacted Europe’s banks, Islamic financial institutions had weathered the global crisis and emerged to be the most well managed.

“Therefore, we can learn a lot from Islamic finance and from Asia, as we have much in common.

“The key elements in Islamic finance that we need in the world today, particularly in Europe, are stability, financial partnership, provision of excessive risk and speculation as well as ethical principles,” he added.

Frieden said in Islamic finance, the financial relationship between the lender and borrower, had assured the ‘partnership mentality’, which was found to lead to certain stability.

Explaining the need to avoid excessive risk taking place, Frieden said this was among the key goals of Europe and remained an important feature found in Islamic finance.

“The provision against speculation and gambling, which is prohibited in Islamic finance, is what we can concentrate on,” he added.

Frieden also said the element of ethical principles should not be limited to the Islamic finance industry alone. He gave an assurance that Europe would find a solution to the debt-crisis that had led to volatility in the global economy.

“There’s no one easy solution and one meeting can’t solve the crisis. We have embarked on a step-by-step process to solve the problems.

“We will find a solution to the Greek issue. The Euro will be a currency you can count on in the future and see growth,” he said.

Frieden said Asia and Europe must join forces for the development and prosperity of the global economy.

“Therefore, Asian investors should look at Europe for trade and investment purposes, going forward,” he added. — Bernama

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