Austria's finance minister rejected Sunday a new draft proposal aimed at resolving stubborn differences over reforms to the EU's fiscal rules, saying it was "unacceptable." "In its present form it is in my view unacceptable," Karl-Heinz Grasser said on arrival at a meeting of eurozone finance ministers in Brussels, hoping to reach agreement ahead of an EU summit this week. He was speaking after the EU's Luxembourg presidency presented new proposals to the EU's 25 member states aimed at reforming the Stability and Growth Pact, which enshrines the rules underpinning Europe's single currency.
Diplomats warn accord will be hard to reach at Sunday's talks, amid deep discord between big countries like Germany pushing to make the rules more flexible and smaller states who insist on strict fiscal discipline.
The 1997 budget pact was all but suspended in November 2003 when EU heavyweights France and Germany were let off the hook despite repeatedly breaching a key requirement of the rule book.
If finance ministers fail to agree, the pact reform battle will be handed over to EU leaders due to meet in Brussels on Tuesday and Wednesday.
Islamic banking a rising force in global finance
SINGAPORE: Islamic financial products are fast becoming the darlings of the global banking industry, attracting Muslims and non-Muslims due to risk-sharing, ethical provisions and no-interest policies, industry experts said. "The Islamic banking market is growing, nobody can now ignore this market," Ikbal Daredia, deputy chief executive of Bahrain-based Noriba Bank, said last week at a financial conference in Singapore.
"You can see (mainstream) banks embracing Islamic banking one way or the other. I think this is a market that's here to stay."
Current estimates put the size of the global market at between 200-300 billion US dollars and growing at 15 percent annually, the conference, organised by financial research firm The Asian Banker, was told.
Islamic financial services range from basic bank deposits to investment accounts, equity funds, bonds and more recently Islamic hedge funds and swap equivalents, while more new products are in the pipeline.
With its roots expanding in the Middle East, Islamic banking stamped its mark in Europe when the Islamic Bank of Britain opened in London in 2003 to meet the needs of the country's 1.8 million Muslims.
Britain's fifth-largest bank, Lloyds TSB, announced in February it would become the country's first high street bank to introduce a personal bank account compatible with Sharia law.
And in September last year, the state government of Saxony-Anhalt in Germany launched Europe's first sub-sovereign bond under Islamic principles in the form of a 100-million-euro (133 million-US-dollar) bond called "sukuk" in Arabic.
The US Treasury Department also appointed in May last year an Islamic scholar as its principal adviser on Islamic finance in an effort to better understand the market.
In Asia, Singapore is trying to capitalise on the city-state's reputation as a regional financial centre to tap into the Islamic boom.
"We believe that there is some momentum for Islamic financial services to become increasingly a globally recognised and accepted form of financing," Ong Chong Tee, deputy managing director of the Monetary Authority of Singapore, told the conference.
Singapore Senior Minister Goh Chok Tong has said the city-state cannot be a complete global financial hub if it does not offer Islamic financial services.
Largely Muslim Malaysia is the current Asian leader in Islamic banking after introducing the service in 1983.
The country has eight fully-fledged Islamic banks including three players from the Middle East - Saudi Arabia's largest bank Al Rajhi Banking and Investment, a consortium led by the Qatar Islamic Bank and Kuwait Finance House.
Malaysia's Islamic banking sector represents nearly 10 percent of the nation's banking system, and the government is aiming to double this to 20 percent by 2010. The Islamic banking craze is gradually gaining ground elsewhere in Southeast Asia, which accounts for one fifth of the world Muslim population of 1.4 billion.
David Vicary, director of financial services at Deloitte Consulting in Malaysia, told the conference there was growing interest in Indonesia and the Philippines, while Thailand already has its own Islamic banks.
In South Asia, Sri Lanka is "doing some work" on Islamic banking, while Pakistan has launched a major effort to develop Islamic financial instruments, he said.
Even Australia and New Zealand have shown interest, said Vicary.
"I think what might be interesting is China," he said, noting that the People's Bank of China is an associate member of the Kuala Lumpur-based Islamic Financial Services Board (IFSB), tasked to set standards for the Islamic financial markets.
Middle East banks are using Malaysia as a base to expand their businesses into China, he said. Islamic finance fuses principles of Sharia law and modern banking.
While aiming to target Muslims, who consider traditional banking as impure, Islamic products have also attracted non-Muslim clients partly because banks operating under Shariah law charge no interest.
And unlike in conventional banking where clients usually bear all the brunt in case of a financial loss, Islamic banks share in absorbing risks.
Funds are also banned from investing in companies associated with tobacco, alcohol or gambling considered as taboo to Muslims - a feature attractive to so-called "ethical" investors.
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