The Art of RF (Riba-Free) Islamic Banking and Finance: Tools and Techniques for Community-Based Banking, 2nd Edition

CHAPTER 18 Visions for the Future of RF Banking

THE 2008 GLOBAL ECONOMIC AND FINANCIAL MELTDOWN

As I started writing the first edition of this book in 2009, the world was experiencing the deepest economic and financial meltdown since the Great Depression of 1929. This meltdown has touched every citizen in the world because of the efficient communication systems that have successfully interconnected the world's financial and banking systems. It is unfortunate and sad to experience the laying off of many employees who had nothing to do with what happened; the loss of their homes through foreclosures; the decline in living standards, not only in the developed world but also in the developing countries; and the increase in poverty worldwide.

The core reason for what happened has been a culture of “making” money on money by renting it with interest (ribit/riba) and speculating with it instead of working hard to earn it. The financial and banking system in the United States is well designed and regulated. Unfortunately, it has been abused by some who claimed that they could create money by using hedge funds, financial speculation, and gambling. The unfortunate thing is that many pension funds joined the party because they were impressed by the high returns realized by these speculative investment funds. These pension fund managers should have known better; they were entrusted with the future retirement funds of millions of Americans. Many of those who speculated and gambled with ...