Banks Could Learn From Islam, Vatican Says

“The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the Vatican’s official newspaper, L’Osservatore Romano, said in an article this week.

Author Loretta Napoleoni and Abaxbank fixed-income strategist Claudia Segre say in the article that “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral.” Sukuk may be used to fund the “‘car industry or the next Olympic Games in London,” they say.

Pope Benedict XVI reflected on crashing financial markets in an Oct. 7 speech, saying that “money vanishes, it is nothing,” and he concluded that “the only solid reality is the word of God.” The Vatican has been paying attention to the global financial meltdown and ran articles in its official newspaper that criticize the free-market model for having “grown too much and badly in the past two decades.”