BoE opens sharia-compliant facility after six years of work
‘Wakalah’ liquidity facility designed to address disadvantage faced by Islamic banks
The Bank of England opened its long-awaited sharia-complaint liquidity facility on December 2, after six years of planning and development.
The Alternative Liquidity Facility (ALF) is structured as a wakalah, or fund-based facility. Banks can deposit cash with the facility, and will receive a return based on an underlying portfolio of sukuk, or Islamic bonds. The BoE said it was the first Western central bank to offer a facility of this kind, in a statement issued on December 2.
Rhys Phillips
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