The Koran prohibits the payment of interest, but…
The United Kingdom has announced, with much fanfare and a letter from the Chancellor of the Exchequer, that it aims to become the first Western country to issue a sovereign sukuk, a type of Islamic bond that complies with the Sharia’s ban on charging interest.
The £200 million (€240 million) issue planned for 2014 is a drop in the ocean of British public debt, as the Bank of England is buying outright almost 2,000 times that amount in its quantitative easing program. The move reflects the growing role of Islamic finance, thanks in part to the huge amounts of wealth held by pious Muslims, many of whom now live in the West.
Indeed, one of the more interesting sukuk issues of late was a €500,000 bond from Bibar, a French catering company specializing in halal foods, to finance the opening of a new Al Farooj restaurant in Paris.
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