Leave it to the New York Times to not bother asking about the rich history of Islamic banks bankrolling suicide bombings.
Rising oil wealth is lifting Islamic banking -- banking that adheres to the laws of the Koran and its prohibition against charging interest -- into the financial mainstream.
Big banks, including Citigroup, HSBC and Deutsche Bank, as well as financial capitals like London, Tokyo and Hong Kong, are all going into the Islamic banking business. An estimated 300 Islamic financial institutions hold at least US$500 billion in assets, and deposits are increasing more than 10 percent a year.
In addition to Islamic loans, there are Islamic bonds, Islamic credit cards and even Islamic derivatives. Loans and bonds that conform to the Koran are already available in the US. And Britain, Japan and Thailand are contemplating issuing Islamic bonds of their own.
... Islamic finance also avoids practices prohibited under Shariah: Islamic bankers cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
...Islamic financial institutions have to depend on their own boards of Shariah scholars to approve every product. Shariah scholars are rare, and those with financial understanding even rarer, so many scholars sit on several boards, earning up to US$100,000 in retainers. "If they're complaining there is a shortage, what are they doing to solve this problem?" asked Sheikh Nizam Yaquby, a scholar based in Bahrain who sits on the boards of Citigroup, AIG and HSBC, among others.For a slightly less gushing viewpoint of Islamic finance, see this FrontPage article.
...In the early 1990s, Malaysia devised the first Islamic bond, or sukuk, an accomplishment it expanded on in 2002 by issuing the first global sukuk, raising US$600 million. Now the global sukuk market totals US$82.2 billion, with Malaysia accounting for two-thirds of it....
Britain, which licensed its first Islamic bank in 2004, plans to issue its own sukuk. Japan's Bank for International Cooperation is planning a US$300 million sukuk. And in July, a Texas-based oil firm, East Cameron Partners, issued the first US sukuk, raising US$165.7 million.
For much more detail, see the Terror Finance Blog.