Bank of England plans liquidity tool for Islamic banks

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Observer Report

London

The Bank of England said on Thursday it will develop a Shariah-compliant liquidity tool for use by Islamic banks, underscoring efforts to attract business from the industry’s core centres in the Middle East and South East Asia.
London has long sought to position itself as a global hub for Islamic finance, going as far as issuing a sovereign Islamic bond in 2014, and tools to support its Islamic banking sector could help weather the economic impact of leaving the European Union.
The central bank has issued a consultation paper on a fund-based deposit model for the facility, which would help Islamic lenders meet regulatory requirements for liquid asset buffers.
Islamic finance follows religious principles such as bans on gambling and outright speculation, with interest-bearing products deemed off-limits.