Introduction: continuing the debate on Islamic finance

Abstract

The brief editorial note introduces the new issue of the journal. The present issue contains the second article of a three-installments series on Islamic finance, followed by an article on industrial policy in the midst of the Eurozone crisis and a historical account of some early writings by Minsky on macro-prudential regulation. The paper by Askari, Krichene and Mirakhor deals with the new interest in Europe for Islamic finance. Besides the fundamental ethical, religious and philosophical dimensions raised by it, connected e.g. to what role should finance play in our societies, the immediate policy relevance of the debate around Islamic finance rests in the on-going competition among developed countries to attract financial capital from abroad. From a Keynesian point of view, one of the main objections to such system is the proposal of 100% reserve banking. As Kregel (2014) notes such proposal “eliminates the banking system”. However, this is regarded by some of its proponents as one of the very advantages of an Islamic financial system, because it may reduce financial speculation and the disconnection of finance from the real economy.

JEL codes: P43, E12, A11

Keywords: introduction, Minsky, Islamic finance