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I would like to know about the history of Islamic banking.
Islamic banking is new only with respect to the emergence of Western-
style banking institutions claiming to adhere to Islamic rules on the
prohibition of interest. There have, of course, always been various
Islamic trusts and mutual societies concerned with helping people
through cash flow problems or with financing larger projects. First
experiments of "Islamic Banks" started in Egypt at the end of the 60's,
and over the next two decades a diverse number of Islamic Banks,
Islamic Investment Banks, and Islamic Development Banks emerged,
and eventually received government backing in some Muslim
countries, e.g. Pakistan, Malaysia, and the Gulf States. They have
largely focused on trying to become major players in international
banking and developing instruments akin to those used by other banks
whilst finding technical legal explanations to accommodate those
developments with the stipulations of Islamic Law. Thus they can often
be seen as an attempt to make banking practices more acceptable to
Muslims and to provide competition for non-Muslim banks. They have
largely shied away from fundamentally challenging the usurious nature
of present day banking, namely the fractional reserve banking method
by which a bank puts fiat money into circulation. Nor have they
redefined the task of banking as a service for the common good and to
redress inequalities and fight poverty as the earlier mutual trust
funds
would have intended; instead they have been overtly concerned with
investment opportunities and market share.
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