What are the weakness and strengths of Islamic banking?

Answer 1

current day Islamic banking is not really Islamic banking.

Islam forbids 'ribbah' this includes interest rates, as this creates inflation, devalues money - and it forbids someone to make profit by lending money to someone.

the 'Islamic' banks of today manipulate people ideas of 'ribbah' and instead of charging a percentage, they charge commisions, which is till 'ribbah' but some Muslims define ribbah as interest only, which is not true.

ribbah can be a number of things not just interest rates.

but the law says you cannot profit by un earned income, this includes gambling, interest rates amongst other things.

modern Islamic banks have manipualted this idea to their own gain by charging riduclous amounts for borrowing money. most Islamic leaders agree this is not right.

a proper Islamic banking system/economy would not have interest rates.

interest rates cause currency values to fluctuate, this means one countries wealth can appreciate/depreciate relative to another countries, this allows for economic warfare and for the richer countries to obtain goods at a cheaper rate.

unfortunately the entire world (except china) has adopted this system and its one of the root causes of the credit crunch. and its why china has been so successful because they didnt play into this scheme and let someone else value their money.