Islamic banking and the "duty of accommodation"

The chapter analyses the regulatory accommodation process of Islamic banking within the European Union framework, drawing a comparison with the US regulatory context. While the EU Treaty does not lay down any provisions on the relationship between economic activities and religious freedom, it has been assumed that the First Amendment of the US Constitution contains a convincing argument for the duty of accommodation of Islamic banking as domestic banks. The paper argues this conclusion is not confirmed when the matter is examined carefully. The analysis shows that the US and EU regulators are both driven by a secular functional-based approach to the authorization of Islamic banking so that the "functional interchangeability" appraoch to banking business can build bridges between the US and the European legal frameworks.