Consultation on Shari’ah-Compliant Liquidity Facilities

April 6, 2017

The Bank of England (BoE) has published a consultation paper on the establishment of a Shari’ah compliant deposit facility.

Islamic banks are currently unable to use the BoE’s existing facilities as they involve interest, which is not deemed Shari’ah compliant. Therefore, based on market feedback and internal analysis, the BoE is set to implement a deposit facility using a fund based model. Such facilities would provide greater flexibility to Islamic banks in the UK, in meeting their liquidity requirements under the Basel III rules. The new consultation paper provides further details on how this model would work in practice.

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