Islamic mortgages could prevent recessions

Mon, 08 Aug 2011
With a focus on the avoidance of debt, a shift towards the increasingly popular Islamic mortgage set-up could help the UK avoid future recessions.

According to the Wall Street Journal, the Christian and Islamic bans on unreasonably high interest and debt peonage in the Middle Ages helped make trade possible by ensuring that ordinary people had the means to buy from merchants.

However, the 20th and 21st centuries have seen a "new phase of credit money", which has achieved the opposite of the religious-based monetary policies of yesteryear, the article claims.

"Instead of setting up great overarching institutions designed to protect debtors, we created institutions like the Standard and Poor's or the International Monetary Fund, [which were] essentially designed instead to protect creditors," University of London anthropology lecturer David Graeber wrote.

He added that this system has shown recently that it does not work, with recent squabbling in the US government over increasing the debt threshold a prime example.

Islamic mortgages offer Muslims credit that is in line with Sharia law by having the bank buy the property and allowing the borrower to pay a number of instalments to help buy the house outright at the end of the contract.
Salaam-u-Allaikum
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