National and Global Islamic Financial Architecture:
Problems and Possible Solutions for the OIC Member Countries
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Shari’ah-compliant policies, however. Finally, FWU, which has already been mentioned, is a
medium-sized company based in Munich and is largely concerned with creating insurance
products, some of them in the Takaful area. Its centre of excellence for Takaful is in Dubai.54
German universities have had research activities in Islamic finance, and Masters' courses in
that area are currently offered in Bremen, in a joint programme with a Malaysian institution.55
Overall, therefore, Germany has adopted a facilitative rather than a strategic approach to
Islamic finance, and very little Islamic business has so far been done in that country.
Germany’s presence in international markets has been seen mainly in banking and Takaful, but
through the operations of German companies in other jurisdictions.
The architectural institutions related to Islamic finance in Germany are summarized below:
Legal infrastructure
Germany has made no adjustments to its legal system to accommodate Islamic finance. In
particular, it has not yet provided tax neutrality for sukuk.
Financial System Regulation and Supervision Framework
No material changes have been made to the financial system regulatory framework which is, in
any event, largely determined at the European level. The system treats profit-sharing
investment accounts as deposits and this would regulate Takaful in the same way as
conventional insurance, etc.
Shariah Governance Framework
There is no provision for Shari’ah governance either at the national or at firm level.
Liquidity Infrastructure
There appears to have been no moves to assist Islamic banks in managing their liquidity.
Information Infrastructure and Transparency
Germany uses IFRS and has made no amendments to accommodate Islamic finance.
Credit ratings in Germany are dominated by major international agencies and the local agency
Euler Hermes. While some of the international agencies have rating methodologies for Islamic
institutions, there have been no developments specific to Germany.
Consumer Protection Architecture
Germany has an advanced consumer protection and financial literacy architecture, but there
are no developments specific to Islamic finance to record.
Profit-sharing investment accounts are treated as deposits for regulatory purposes and are
therefore eligible for cover from the German deposit insurance schemes, (There are several of
these, covering different segments of the industry, but collectively meeting the requirements of
European law.)
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