France Adjusts Laws To Allow Islamic Banking
The French government wants to make Paris the world capital of Islamic investment as it looks for new sources of cash to battle the credit crisis. But even with the economic downturn, the campaign is raising some hackles.
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STEVE INSKEEP, host:
France's government is looking for new ways to battle the credit crisis and it's come up with an idea for bringing in new sources of cash.
We have a report this morning from Eleanor Beardsley.
ELEANOR BEARDSLEY: Home to Europe's largest Muslim minority, France is hoping to unseat London as the European hub for Islamic banking. It wants to do that by offering financial products that comply with sharia law and meet the needs of big investors, mostly from the Gulf countries.
French Finance Minister Christine Lagarde gave the government's new pitch recently on a television channel aimed at Muslims.
Ms. CHRISTINE LAGARDE (French Finance Minister): (Through translator) I would like to convince you that London is not your only choice for Islamic investment, but that Paris is also ready to welcome you and any of your clients who are looking for an alternative.
BEARDSLEY: Islamic banks, which do not charge or earn interest, were left unscathed by the financial crisis. According to Moody's rating agency, they hold $700 billion in estimated assets. With the idea of attracting some of that cash, this month the French parliament approved a number of adjustments to the country's banking laws to allow Islamic bonds known as sukuk to be issued for the first time.
But that isn't going over well with some opposition politicians who accused the government of undermining France's much cherished secularism.
(Soundbite of voices)
BEARDSLEY: One parliamentarian charged French President Nicolas Sarkozy with introducing Islamic law into the framework of the French legal system.
Unidentified Man: (French spoken)
BEARDSLEY: While the opposition socialist challenged the legality of the new financial legislation before the country's Supreme Court, the Islamic Bank of Qatar has been the first to apply for a license to operate in France.
For NPR News, I'm Eleanor Beardsley in Paris.
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