By Micah Halpern
I've Been Thinking:
In Egypt yesterday President Morsi signed the Sukuk into law.
Sukuk is the equivalent of Islamic investment bonds. If all goes as planned, Morsi may have just begun to create a system that will enable Egypt to sell and raise money for the development of the nation.
Islamic law, known as Shaaria, rejects the concept of interest so normal fixed market bonds are not permitted.
Money cannot produce money. It can only be used as a measurement of value. So, simple interest is shunned. So too are credit cards, most other conventional uses of money and other interest payments. It is permitted to rent and it is permissible to get paid for services.
There is a very important aspect of Sukuk called Maslaha. Maslaha is when there is overwhelming public need and hence the money may be used and invested to create a larger collective good. By creating an aspect of public need in the bond, one can mitigate the potential investment loss.
And that is a method of creating a kosher Sakk (the singular of Sukuk.)
Hopefully this new law will permit Egypt the basics and they will pull themselves up and out of a serious economic crisis.
Micah@MicahHalpern,com
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