– By Samuel Harrison, current MIF student –

This month, the entire MIF class attended the inauguration ceremony of the Saudi-Spanish Center for Islamic Economics and Finance, hosted at IE Business School. Dr. Ahmad M. Ali, President of the Islamic Development Bank, Saudi Arabia, was the key speaker. He focused around the future of Islamic Finance. He argued that Spain was chosen as a partner country by the Islamic community due to its strong historical links, acting as a bridge between western and middle-eastern societies. We were also told that Spain has produced a great number of outstanding Islamic scholars, further cementing it as the location of choice for the Islamic Economics and Finance center.

 The center’s creation came about as the importance of an effective and advanced financial system has been highly recognized by the Islamic community. The goal is to broaden levels of expertise in developmental finance and economics and it should also help Spain further become the European gateway to knowledge on Islamic finance.

 As well as the usual formalities, the session touched on some of the key topics and discussion points in Islamic Finance currently. We learnt, for example, that the sale of debt is forbidden in Islamic finance. This is an interesting concept, since it effectively prevents investors from shifting the risk of default to others, which should be an effective counter action to the problem of moral hazard, (with securitization etc.) which certainly contributed to the ongoing financial crisis.  Other aspects of Shariah law were also briefly discussed, offering insight into this increasingly important and trendy area of finance.  The center will maintain its strong ties with the Islamic Development Bank (IDB), an organization with a rich history and highly successful operations – boasting a credit rating of AAA, which Professor Ignacio de la Torre jokingly pointed out is higher than that of the Kingdom of Spain.

Next year, IE Business School, according to Prof. Ignacio de la Torre, will offer its first Finance degree with key modules being taught on Islamic Finance.  IE hopes to stay at the forefront of ongoing industry trends that are placing increasing importance on Islamic Finance and related subject matter.