The Bank of England (BoE) has
announced plans to extend its liquidity facilities to Islamic
banks, which it traditionally cannot engage with due to the
prohibition of interest under shariah law.
Practitioners in the UK have welcomed the news and its
impact on the rapidly growing industry, as the country
its plan to become the western hub for Islamic finance.
Central banks in other western countries are said to be
planning similar extensions of facilities, though the UK is the
first to put it into action.
The British government has made boosting the industry a
matter of policy, and it has paid off. With five dedicated
banks and a further 20 with Islamic windows, London is home to
more than double the shariah-compliant institutions than in the
US, and more than any other OECD country’s
capital. But one of the major stumbling blocks for these
institutions operating in...