Islamic Banks and the European Banking System: Critical Profiles and Law

Abstract

This paper provides a general, but in-depth, overview of aspects of incompatibility and actual interest profiles of Islamic finance in relation to the system of the European banking system, identifying some prospects for positive future developments. It examines the relevant Islamic principles for banking and the differences from conventional European banks for regulation and supervision, a few limited experiences and possible relationships. The modern communication between the Islamic banking scheme and the European (and international) one is certainly allowed by the activity of the Islamic Financial Supervisory Board (IFSB), especially as regards the adaptation to the Basel Committee standards and the related capital requirements, transparency criteria and common references, considering the global application to operate in the international markets. The examination of the relationship with the European Banking Union allows the identification of future profiles for debate and research in economics law, considering the suitability of regulatory adjustments and the interaction between EU and national law and the interesting ethical aims of the socially responsible Islamic finance.

Keywords: Islamic Finance and Banking, European Banking System, European Banking Union, Regulation and Supervision, Transparency and Certainty of Rules, Comparison and Perspectives

JEL Classification: G1, G15, G2, G21, G28, K00, K2