Bankers and academics in Italy are stepping up efforts to develop Islamic finance in the country, a campaign which could benefit from growing economic links between Gulf countries and the euro zone's third largest economy, reports Reuters (18 Feb 2014).
Islamic finance has so far made only marginal progress in continental Europe, mainly inFrance and Germany. But Italy is seeking trade and investment with wealthy Gulf Arab states as a way to grow out of its debt problems.
Kuwait's sovereign wealth fund announced this month that it would invest 500 million euros ($685 million) in Italian companies in coordination with the Italian government's own strategic investment fund. Italy made a similar deal with Qatar last year.
Italy's trade ties with the Gulf are booming; its exports to the United Arab Emirates hit 5.5 billion euros in 2012, a 16.7 percent rise from 2011, government data shows.
Only about 2 percent of Italy's population of 61 million are Muslim. But the hope is that as Gulf companies and investors increase their activities in Italy, Islamic finance - which follows religious principles such as bans on interest payments and pure monetary speculation - will follow.
Italian firms raising loans could use Islamic structures to attract sharia-compliant banksfrom the Gulf, for example. Italian bonds and equities could become attractive to Islamic funds if they were certified as sharia-compliant.
"I think the development of sharia-compliant products is an important opportunity for Italy - it might become one of the drivers to get finally out of the economic crisis," said Enrico Giustiniani, analyst at Banca Finnat Euramerica in Rome.
"There is quite a big interest from Islamic funds and Islamic institutional investors to invest in Italy, especially in this period with many companies on sale."
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