BoE’s move to boost Islamic liquidity welcomed

Author: Lizzie Meager | Published: 22 Feb 2016

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 continues with 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...