Introductory Remarks at The Islamic Finance 101 Seminar
John B. Taylor
Under Secretary of Treasury for International Affairs
U.S. Treasury Department
April 26, 2002
Welcome to Islamic Finance 101! As the Under Secretary for International Affairs at the Department of Treasury, I want to thank you all for joining us at this seminar on the fundamentals of Islamic Finance.
Today’s event is a result of a collaborative effort between the Treasury Department and the Harvard Islamic Finance Information Program (HIFIP). HIFIP helped us design this program and enabled us to invite prominent Islamic financial experts to speak today. We truly appreciate HIFIP’s assistance in making this event possible.
We are very grateful that this diverse panel is here today to share their knowledge with us. They have joined us from great distances – travelling from Bahrain, Houston, Boston, and New York to share their expertise with us. Though I’m saving the introductions of our speakers to Thomas Mullins, Executive Director of HIFIP and Associate Director of the Center for Middle Eastern Studies at Harvard University, I do want to say that our speakers have impressive backgrounds.
I’m particularly pleased to be at this event, surrounded by a number of academics, it brings me back to my days Stanford University where I was a professor for many years.
Treasury’s Office of International Affairs implements the U.S. government’s international finance and economic development policies and develops U.S. policy towards the World Bank and IMF. We have had a growing interest Islamic finance because of its rapid growth and significant presence in many partners of the United States such as Bahrain, Egypt, Indonesia, Kuwait, Malaysia and Pakistan.
Following the events of September 11, President Bush made a top priority of combating the financing of terrorism. Lawful and legitimate institutions such as conventional banks, Islamic banks, money transfer services, hawalas and charities must not be abused by terrorists. We are working with the international community to ensure just that. We need to understand how these legitimate institutions operate so that we can help strengthen them and prevent terrorists from abusing these institutions. From my exposure so far, I’ve observed that the economic principles of Islamic finance and conventional finance are the same, though the structure of Islamic financial transactions can be different.
Today’s seminar was inspired by a roundtable that Secretary O’Neill attended last month in Bahrain. At the roundtable, hosted by Citibank Bahrain’s Islamic Investment Bank, the participants described the philosophy behind Islamic finance; they went into the nitty-gritty of an Islamic financial transaction; and they discussed the accounting and supervisory issues related to Islamic banking. I’m pleased that one of the speakers from that roundtable has joined us on today’s panel Dr. Rifaat Abdel Karim, the head of the Accounting and Auditing Organization for Islamic Financial Institutions. We left the roundtable with a sense of what Islamic finance really is – the Secretary wanted to make sure that we hosted a similar event in the United States to “demystify” Islamic banking for our colleagues in Washington who may not have exposure to this topic.
I thought you might also be interested to know about the increasing international effort being made to understand Islamic finance. We recently held a meeting of G-7 Finance Ministers and invited other world leaders to participate. At this meeting, the Central Bank Governor of Malaysia, Dr. Zeti Akhtar Aziz gave us an informative short presentation on Islamic finance and led us in a discussion.
I hope that today we will have an open dialogue about Islamic finance end encourage you to feel free to ask questions and make comments. We have a wide array of audience members including commercial bankers, investors, banking regulators, economists, policymakers, Congressional staffers, researchers, lawyers, consultants as well as Islamic banking practitioners. I look forward to hearing the questions that you pose during the Q & A session as I expect that they will reflect your wide-ranging experiences and interests.
Thank you all again and let me turn this over to Tom Mullins.