The Bank of England intends to offer a proposed Shariah-compliant liquidity tool to more financial institutions other than Islamic lenders, Reuters reported March 5, citing Arshadur Rahman, the central bank's sterling markets division manager.
Rahman, who also serves as the central bank's Islamic finance specialist, said the tool would also be offered to firms that incorporate Shariah compliance in their articles of association, possibly including Islamic mortgage, insurance and leasing firms.
The facility will be based on a so-called wakala agency contract, backed by high-quality liquid assets, Reuters noted.
London has been aiming to attract business from Middle Eastern and Southeast Asian financial centers, in a bid to become a global Islamic finance hub, the newswire wrote, adding that the central bank has been developing a fund-based deposit model that would aid Islamic banks in meeting regulatory requirements for liquid asset buffers.
The banking official said the regulator will start the legal documentation and risk-hedging process in 2018, although there is still no fixed date for the launch of the new tool, Reuters reported.
