State Bank of Pakistan (SBP) Deputy Governor Saeed Ahmad recently claimed that Shariah finance is going to become a better alternative to conventional banking.
“Given its global outreach, growing recognition as a stable system, and its ability to provide financial solutions to all business needs, Islamic finance is all set to establish itself as a better alternative to the conventional financial system,” Ahmad said.
He parroted the false claim that the global financial crisis in 2008-09 made western financial experts look for an alternative under which the international financial system could overcome the weaknesses of the conventional system.
Virtually none of what Ahmad said was accurate. Given that he is an official with the same government that knowingly harbored mass-murdering Jihadist terrorist Osama Bin Laden for years, it is not particularly surprising that Ahmad would spread inaccurate information to promote Shariah.
There is NO evidence that Shariah financial instruments or institutions are insulated from financial crisis any better than conventional instruments and institutions. In fact, the experience in Dubai and elsewhere of a rash of default on Shariah bonds suggests otherwise. Moreover, Shariah-compliant stock indices fell right along with the broader markets during the last financial crisis.