Islam and Interest rates

[david_harry]

I understand Islam's principles behind the charging of interest (usury) , i.e. amongst other reasons and principles it distorts the financial markets, and that's why it's banned under Sharia Law.

However, the question is: is it true? What would happen if no banks charged interest. Is it a workable model? Bearing in mind that usury was once banned by all major religions should we all be signing up to Islamic Banking?

[dzug]

Yes it's true, but the banks find other ways of charging for their services so it doesn't mean free loans.

To western eyes there are some pretty dodgy semantics going on to hide the fact that in effect interest or its equivalent is charged.

http://en.wikipedia.org/wiki/Islamic_banking has some interesting details.