Central Bank Looking to Implement Fund Based Deposit
Article Overview
Shari’ah compliant liquidity facilities Consultation paper looks at establishing a fund based deposit facility for UK Islamic Financial institutions.
The work to develop a Shari’ah compliant facility commenced in the second half of 2015, and is part of the Bank’s more general approach to broadening market access to central bank liquidity facilities. The Bank recognises that Islamic banks are currently unable to use the Bank’s existing facilities because they involve interest, which is not deemed Shari’ah compliant. In particular, the Sterling Monetary Framework is the mechanism by which the Bank sets interest rates.
