London to bolster Islamic finance credentials
March 16, 2013 § Leave a comment
The UK government has set up an “Islamic finance task force” to reinforce London’s position as the dominant western hub for this niche but fast-growing part of the financial system.
Islamic finance replicates many of the products and services of conventional banks and asset managers but avoids areas prohibited to Muslims – particularly interest – and encourages the use of “real” assets to underlie most transactions.
For example Islamic bonds, known as sukuk, are structured to pay a fixed profit rate rather than a coupon and are commonly backed or based on real estate or infrastructure.
The Islamic finance market has grown strongly over the past decade, powered by Malaysia and the oil-rich Gulf, but London has emerged as an important international centre.
Although the UK has abandoned plans to sell its first sharia-compliant bond, the government hopes that a new working group headed by Treasury minister Greg Clark and Baroness Sayeeda Warsi, a minister at the Foreign Office, will help to burnish the City’s Islamic finance credentials. […]
Source: Financial Times