Islamic Finance Possibilities in Macedonia

Discussion with Milan Adzievski

 Forum: Explain what the wider study “SUKUK – Muslim bonds free of interest?

 Shukarov: study “SUKUK – Muslim bonds free of interest” special attention paid to the differences between conventional and Islamic banking, but not putting the emphasis on the religious basis of Islam, but only to highlight the economic effects are obtained with these interesting financial structures.  Primary motive to start work on this project was the absurdity of the movements of financial markets in the world.  The traditional understanding that higher yields (about the same risk) do not increase demand for certain financial instruments becomes illogical when it is known that sukuk structures do not offer any guaranteed return (interest), and the world financial markets, the demand for them is becoming greater.  That was enough to interest them.  South East European University in Tetovo accept financing, formed a team that I led after two years, issued a final product – a project in which even suggest that it would be good in Macedonia to apply this approach to development financing.

What are the basic principles on which rests sherijatskoto understanding of economic life?

Sharia as a system of moral norms pays great attention to economic relations.  Particularly interesting is that the points allowed and illegal activities that must be followed.  For instance, implies the equivalence of the exchange.  Of course this is nothing new, it is based and the conventional economy.  However, interest has deformed the basic economic principle.  The difference is just in time.  Time no one owns and can not be charged.  Neistovremenata exchange causes and possible spatial displacement.  All this makes a problem when used bezvrednite, paper money as a universal tool razmensko.  Also, Sharia encourages business with the division of risk, entrepreneurship, respect for property rights, transparency and accountability, holiness of contractual obligations, discourages speculative behavior.  Particular attention is paid to the ethics of work, distribution of wealth, social and economic justice, responsibility towards community members, creating public goods.  But zagovara and a whole range of restrictions: unethical transactions with goods and services, ban on collection of interest (neekvivalentna exchanges), making debts, negotiate with some uncertainty of the outcome, deals based on gambling, trading, and any mediation with debt agreements , Forward foreign exchange contracts, etc..

From which sources its own Islamic banking revenues cover operating costs and revenues for salaries and benefits?

Islamic banking, as well as any other business should create earnings which cover their costs and profits.  Islamic banking does not create interest income, but because they create all other nekamatni income: commissions, differences in pricing, payment, and, most importantly, achieved sales revenues of deals.  Like any trader, Islamic banks invest in different business activities on its own behalf and for its own account.  Of them earn, but only if there is profit.  They do not earn profits from previously established, but the realized gains and monetizirana.  Therefore no impact inflatorno.  It is interesting that this currency is designed to be neinflatorno and that the Sharia years before 1400, when they were not known today risky financial innovations and speculations that have great influence on everything pozachestenite financial crises.

Several large banks in the U.S., Britain and Germany started using Islamic banking principles.  Is it possible tend to expand quickly in Macedonia?

Usually that Islamic finance is included in the Islamic countries, but has significant emissions of securities which are based on Islamic principles and Western countries (Britain, Germany, USA), even some of the major banks opened their specific banks that operate exclusively implementing the Islamic financial principles, even if each transaction check with AAOIFI, specialized accounting and financial organization of the Islamic financial organizations.  We study found that no legal obstacles to begin operation of the bank of this kind.  However, under our law, each bank must obtain consent for its established by the Governor NBRM.  Problems can arise because in our banking apply the principles of conventional banking Deposit and may appear and dilemmas and psychological barriers of nature.  Otherwise, it works with banking capital and deposits of citizens and companies holding payment, which means that subject to commercial risks and should be supervizirano like any other bank.  If, however, is organized as a kind of open investment fund, then apply another regulation and supervision.

Despite the differences, if there are similarities between the classical and Islamic banking, and who are they?

There are many similarities between conventional and Islamic banking.  The biggest difference is that no interest.  All other activities are similar.  Islamic banks in the basis function as investment banks that collect deposits, or a large part of the assets related to its own investment deals.  Partly deals Partnership (Mudarabah, Musharakah), leasing (idzhara), intermediate securities (sukuk), and even deals that are made to ensure future trade deals (price + expenses) which is largely just like interest agreements or dolgovno based structured arrangements.  If you follow the complex forms of derivative instruments that exist in conventional banking, you can find many similarities with many Islamic financial instruments.  That is why today largely pays attention to the similarities may be provided as soon as more liquidity to the Islamic, yet new financial markets.

 What are the known relevant data on the total profits of the banks in Macedonia in 2008  and commented that amounts, in particular factors that generate these numbers?

 In Macedonia, the latest information on the operations of the banks that they feel the adverse impacts of the financial crisis.  Banks reduce their profits.  Only a few banks, marking a loss of its operations in 2008  The crisis in Macedonia is mainly manifests in the real sector and the banks can not remain immune to it.  Deposits are reduced, hence the credit activity is reduced.  However, at a time when export activity dramatically decreases, while imports decline, but with less pace and doznakite abroad are broken, there is a problem of the large trade deficit and current account deficit and, as a result, international reserves of the country drastically reduced.  Trade deficit in first quarter amounts to 620 million euros, which speaks of the possibility of achieving a record deficit that would have exceeded two billion euros.  Unfortunately, now feel and razbranuvanja and market crude oil prices which, while it would complicate the problem of foreign currency liquidity in an even greater extent.  That’s why the National Bank pursued a policy of expensive money to reduce pressure on menuvachkiot market withdrawal and already smalenata foreign currency liquidity.  They use banks, so marking revenue and costly and bezrizichni treasury bills which emits National Bank to sterilized the excess liquidity denar.  Thus be extracted considerable financial potential of the real sector and the more complicated situation at him, he just should withdraw development and to mitigate the consequences of the crisis.  One reason for the complex financial situation in Macedonia is nekolkugodishnoto transfer credit activity to the household (consumption), rather than to the economy (supply).

Are they, and past bank statements, are the result of just a bank check or policy question for crack usury?

Additional problem of the banking sector in Macedonia is the high degree of existence monopoliziranost causing high prices for low quality of banking services.  I would not like to use the term “crack usury,” but the interest rates on loans are extremely high.  Especially high when considered zero inflation, which makes them extremely realistic high neprimerno for this time of financial crisis and the crisis of the real sector and the huge unemployment.  It is clear that this is partly a result of pressure that makes the offer of public financial instruments bezrizichni high rate of return (9%), but is also partly due to the economy’s inability to create new value in times of crisis that will alimentira significant public expenditure.  If public and private consumption is not reduced, will be reduced or interest rates, which is the main condition for reviving the economy, which would be necessary at least at the time when I noticed the first signs of the revitalization of the global economy, not only to the full landing planned budget.

Source  : forum.com  trsld

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