Does ruling AK Party consider interest-free banking as a solution to inflation?
“The ruling party had meetings in KIZILCAHAMAM for three consecutive days. The 30th Consultation and Evaluation Meeting on the main issues of Turkey was held. Of course, the economy was also addressed. Parliamentary work, economy, security and foreign policy sessions were held on the first day of the camp.” (BARIS SOYDAN)
Down below is an excerpt from article written by BARIS SOYDAN a prominent jounalist on halktv.com.tr web page. The journalist shares important information about issues discussed in this gathering, the most important one to be inflation. Thanks to Mr. Soydan fort his valuable article.
“I learned that the first day’s session focused on interest-free banking. You may ask what about inflation, currency rate, current account deficit, the main issues of the economy?, quite rightly. Interest-free banking must be seen as a way to solve these problems, as well.
Actually, the name interest-free banking is not correct. Correct, but not correct. Of course, the system is based on interest-free banking, but it is noted that President Erdogan does not like this naming, he is angry. Instead, the expression “participation finance” is preferred.
As a matter of fact, the phrase interest-free banking was removed from the legislation, and participation banking replaced it.
President Erdogan’s views on interest are well known. He thinks that high interest rates are behind high inflation. That is why the Central Bank has reduced the policy interest rate from 19 percent to 14 percent. Despite the fact that it led to a sharp decline in the value of TL and the transfer of wealth from one segment of society to another, it continues to keep it at this level.”
“In fact, the President is against not only high interest, but also interest in general. He is very clear about this and had said, “I will continue my struggle with interest to the end. We need to know for once: nass (about interest rate imposed by Islam etc) is in the heart on this issue. Now that we have Nass to orient us, what’s happening to you and me?”
“He believes that participation banks play a big role in lowering interest rates. It has previously been stated that he wanted state-owned banks to act together with participation finance companies and reduce interest rates.
In fact, although they don’t call it interest, the cost of the money used by participation banks is not inferior to interest. Even in some periods, participation banks use funds at a higher cost than other banks. In other words, contrary to popular belief (by some), they don’t actually contribute much to lowering interest rates in the system.
It is stated that the reason behind the fact that the public participation banks have opened one after another in recent years is the high cost of money in private participation banks.
It is even stated that one of the leading public banks was transformed into a participation bank at one time, and it was abandoned when the President was told about the legal problems that this would entail.”
SOURCE: halktv.com.tr/makale/kizilcahamamda-cozum-yolu-olarak-faizsiz-bankacilik-ele-alindi-679474
