Without claiming to be exhaustive on such an ambitious subject, particularly in front of an audience of  1  Source: La finance islamique : une solution à la crise ? (2009), E. Jouini and O. Pastré, Economica. 2  Monitor Group and Fondazione Eni Enrico Mattei (August 2009), Analysis of Sovereign Wealth Fund Transactions During Q1 2009. 3  Monitor Group and Fondazione Eni Enrico Mattei (August 2009). 4  An IFOP survey, disclosed at the end of 2008, on the basis of interviews with 530 people of Muslim origin from various backgrounds, considered a representative sample of the French Muslim community. 2  BIS Review 118/2009  distinguished Islamic finance specialists, it seems to me nevertheless useful to briefly recall the following points: •  The fundamental principles of Islamic finance can be seen in different ways as far as financial stability is concerned. As you well know, Islamic finance prohibits the payment and receipt of interest at a fixed or predetermined rate. Instead, profit-and-loss sharing arrangements, purchase and resale of goods and services, and the provision of services for fees are the basis of Islamic finance contracts. Islamic finance is therefore systematically backed by real assets. Moreover, it prohibits speculation and the financing of production or trade in specific sectors. On the one hand, these principles can be considered to provide stability for the financial system. Indeed, in Islamic finance, unbacked expansion of credit is precluded, and banks cannot initiate or accentuate a speculative process.
Credit is based on real savings and savings can only earn a return if directly invested in creating activities. Finance and the real economy are closely linked. In the Islamic system, banks can neither carry highly leveraged exposures nor acquire risky financial structured products. By the way, even if the Islamic nature of their finance is not the only explanation, we can note that Islamic finance countries, compared with those of conventional finance, have been relatively less impacted by the crisis. But on the other hand, Islamic banks pose risks to the financial system that in many regards differ from those posed by conventional banks, with respect, for example, to liquidity, operational and legal risks. Indeed, Islamic banks face specific obstacles in liquidity management, as the prohibition of interest has led to the underdevelopment of funding sources. Moreover, operational risk and legal uncertainty can be amplified by the lack of product standardization and the lack of harmonization of Islamic standards, with for example possible differences between Shariah scholars' interpretations, accounting standards, and so on. In the same way, prohibition from financing specific sectors limits the kind of eligible assets for investment, which contributes to increasing the risk of concentration in potentially cyclical sectors such as real estate. This is what happened in certain Gulf countries. •  As the analysis of the principles of Islamic finance does not settle the issue of the relationship between Islamic finance and financial stability, it needs to be supplemented by an empirical analysis.