Donāt they receive base rate interest on their deposits?
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I think weāre splitting hairs here, depositing vs investing. Monzo deposit and donāt invest.
As someone completely disinterested by all forms of religion I have no idea if this is compliant or not.
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By placing the deposit with the bank of england itās being invested. Just because theyāre not doing the investments themselves (itās the other banks and their customers) doesnāt mean that itās not happening.
Yup, this is why I said itās not compliant.
This could be happening and Monzo wouldnāt know as BoE will be lending the money back out and what the customers of other banks do with it is their business but Monzoās money is included in that - that article is factually incorrect.
Why would Monzo agree to not put it into the BoE and lose the interest which is their main source of revenue on alot of peopleās account.
Thereās only one reason - if they wanted to market to people who follow Islamic finance principles. Thereās not a whole lot of benefit to the bank other than this.
I see what you did there 
Absolutely. I was just pointing out that interest was involved, and so it would be non compliant. Iāve no idea whether or not it makes a difference to anyone. And Iām just as disinterested as you 
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Just read on Monzoās blog about this. Iām surprised as I hadnāt heard of them backtracking but it seems they have. Deposits are used to fund loans and overdrafts etc.
We keep most of the money you put in your Monzo accounts in central banks, and lend out a proportion of it as overdrafts and loans.
Why would or should monzo be different because of someoneās religion?!
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Iām not sure how this is ābacktrackingā, as Monzo always said they would use deposits to offer loans and overdrafts to customers.
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As-salamu alaykum!
I had no idea about this and found it really interesting to read. Thanks so much for sharing.
Jonny
Good day
I liked your post it resonates with my FinTech in South Africa , we aligned to the Islamic thinking but we not religious
Here in Africa we shall do FinTech our own way guided by specific circumstances not by some universal ideology that does not fit with US.
Here in South Africa i do FinTech our own way guided by specific circumstances not by some universal ideology that does not fit with US, but aligned with Islamic Banking ideology
Thatās a myth. See this quote:
Another common misconception is that the central bank
determines the quantity of loans and deposits in the
economy by controlling the quantity of central bank money
ā the so-called āmoney multiplierā approach.
From, er, the Bank of Englandās own āMoney creation in the modern economyā
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Interesting thread, a lot I didnāt know about Islamic Banking. Having read through this yesterday, just stumbled across this article on FT which may be of interest to some.
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Interesting thread, as others have said!
Iām curious about the legal aspect of banks owning part of the house under an Ijara or Musharaka - does this mean they are responsible, or I suppose part responsible for building insurance? And how about rules/responsibilities that landlords have to adhere to?
āIāve always found this bit confusing too, like you say itās still just a loan.ā
Itās not a loan, but I can see how itās explained as such. Itās more akin to an interest free loan.
With interest for example, you can overpay, pay early, delay payment. The end value that you pay back is not guaranteed.
With Islamic finance finance, the idea is there are no differences, no surprises, everything is agreed up front.
If I buy a car with a company and agree it is Ā£10k over 4 years, then that is how much I pay. Whether I choose to pay it off early or not, the cost is Ā£10k.
So the way this actually works with dealerships, you can often ask them to add a fee upfront and have an interest free option.
So if the car was Ā£8k, you can buy it cash right now as Ā£8k. Or if you want it as a finance option, the dealership might say no problem, you can pay it over 4 years but weāll need to add Ā£2k admin fee to the cost. So the cost ends up at Ā£10k. Whether I choose to pay it off after a year or after the agreed maximum of 4 years, it will still cost me Ā£10k.
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Those principles are not exclusive to Islam, Catholicism has pretty much the same principles, though everyone long forgot about them. Back in the day, in Catholic countries, Jews werenāt allowed to have property and at the same time Christians werenāt allowed to borrow money at interest. The result was the Jews specialising in banking
What, like medieval times, when people used to dunk witches?
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Here in Portugal up until the early 1700s
Not a myth, nor exaggerated. The difference was that if you did it as a Christian the church/the king would come after you while if you did it as a Jew they wouldnt (except when they were coming for Jews specifically for being Jews). A big part of what was behind the most nefarious actions of the inquisition was the money the Jews amassed with such activities
You say āIberiaā as if that was a single entity but your arguments make clear youāre talking about Spain and itās preceding kingdoms. Iām talking about Portugal more specifically, though if you go far enough back pretty much every Catholic tradition country had those same principles
Tbh, you mentioning āIberian Jewsā or āIberianā anything when it comes to society and policy puts into question any knowledge you may have on the issue