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In reality the privatization process has been limited and as of yet not all banks have been privatized ( commercial nor special ). Also , attempts by the Central Bank to increase charge rates as a way of stymieing inflation have resulted in the removal of two governors between 2008 and 2010 ( Fielding-Smith , 2009 , p . 18 ). President Ahmadinejad and his government have instead chosen to limit credit supplies and maintain low charges , a potentially hazardous move considering poverty levels and the need for credit access ( Payvand Iran News , 2010 ). 10 As a way of improving cash flow however , foreign investment has been sought and as of 2009 the financial sector was opened up to foreign banks , but with international sanctions related to Iran ’ s proposed nuclear program reducing such interaction , this area of potential growth remains unlikely at present .
In this case , an attempt to create a more socially oriented and Islamic model ( strongly linked to a nationalization strategy ) led to the distorted development of the Iranian banking sector . This strategy eventually led to negative impacts upon societal welfare and the eventual attempted return to basic financial norms and values and a partial reintegration with the international financial system .
Towards a Unified International Islamic Finance System ?
Given these tensions in the national
systems , is a unified international
Islamic financial system possible or even desirable ? Efforts to create a larger international Islamic financial system have been ongoing since the 1970s . However , unsurprisingly , forging a consensus or ���� in Islamic finance has proved difficult due to the various regions , countries , and interpretations that make up the sector . For example in addition to the reasons mentioned above , the Islamic credentials of an individual Islamic financial institution ( IFI ) are monitored by their own appointed ������� Supervisory Boards ( SSB ), which normally consist of three members or more and are selected based upon a combination of religious and financial expertise ( Alexakis & Tsikouras , 2009 ). Nevertheless , no two SSBs are likely to have the same opinion on a financial matter , thus complicating the structuring of agreements . Hence , what is permitted via ������� principles in Malaysia could be considered unethical in the more conservative Saudi Arabia . To this end , without standardization , or indeed regulation , the Islamic financial sector will continue to be considered as susceptible to malpractice and irregularities , resulting in limiting potential international interactions . This was evident during a legal battle in 2009 , where Kuwaiti shareholding company , The Investment Dar ( TID ), who had sanctioned the Islamic agreement , refused to pay conventional Lebanese bank , Blom the US $ 10 million it had invested plus 5 % guaranteed return , insisting that the deal no longer complied with its interpretation of ������� because it constituted gain through interest ( Knowledge @ Wharton , 2010 ).
Nevertheless , the obvious benefits of some form of international Islamic financial system with common ������� standards led to the development of the aforementioned financial bodies the AAOIFI and the IFSB . The AAOIFI was founded in Bahrain in 1991 . Many AAOIFI decisions revolve around its upholding of Islamic ethics , evident in its promotion of equity financing rather than the more conventional orientated debt-based approach . For example , it has ruled a number of ����� ( Islamic bonds ) as noncompliant for this very reason as Chairman of AAOIFI ” s ������� board , Sheikh Muhammad Taqi Usmani states :
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