Bright Simons Discusses Digital Economy Challenges
Financial analyst Bright Simons has responded to a previous article clarifying his views on the Bank of Ghana’s Exposure Draft on Non-Interest Banking. The response centred around a specific point made in the original article regarding the necessity of altering banking laws to accommodate such financial systems.
The initial article argued that central banks in secular countries are not obligated to change existing banking laws for non-interest banking to function. It cited the example of the Bank of England, stating, “The Bank of England did not have to change the banking laws.” This point, the author notes, was directly quoted by Mr. Simons in his rebuttal.
The crux of the disagreement lies in whether countries must proactively adapt legislation to promote non-interest banking, or simply permit it without actively outlawing it. The author contends Mr. Simons implied that the former necessitates legal changes while the latter does not.
However, the author insists this isn’t a universal rule. Using the UK as a case study, they highlight that the Bank of England has intentionally avoided a dedicated regulatory framework for Islamic banks to ensure a level playing field for all financial institutions. “The essence is to create a level playing field for all the banks,” the author explains.
Mr. Simons, according to the author, suggests non-interest banks won’t flourish in secular nations without legal adjustments. This claim drew a strong reaction. “When I read this, I honestly could not hold back my laughter,” the author wrote, pointing to the long-standing and robust Islamic banking sector in the UK despite unchanged banking laws.
The author further argues that the success of Islamic banking in the UK, dating back to the 1970s, demonstrates the viability of the system even without specific legal provisions. This contrasts with the situation in Kenya, where banking laws were amended, yet the Islamic banking portfolio remains significantly smaller than in the UK.
Disagreement also arose over the use of religious symbols within Islamic banking. Mr. Simons cited Kenya, but the author questions its relevance as a benchmark, referencing Turkey’s secular approach of avoiding religiously-labelled banking terms. The author also points out that Arabic terms used in these institutions are not intrinsically religious.
Furthermore, the author disputes Mr. Simons’ assertion that a Malaysian Islamic Finance Act was the catalyst for Islamic banking in that nation, stating that the Act was enacted after Islamic finance was already established. They also criticised Mr. Simons for referencing tax law amendments in Australia and the UK when the core debate concerned banking regulations.
Concluding, the author addresses a minor correction. Mr. Simons referenced “KTU,” which the author clarifies is actually Kumasi Technical University (KsTU), distinct from Koforidua Technical University (Koforidua Poly).
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