The Bank of England plans shortly to open a liquidity facility to support the UK’s Islamic finance sector, according to Deputy Governor Dave Ramsden.
A new BoE subsidiary will be established to house the Shariah Compliant Facility, Ramsden said.
This will offer a non-interest-based source of liquidity to comply with Islamic law – the first such facility offered by a major western central bank, he said.
“We have been progressing work to enable Islamic banks to hold Bank of England reserves to meet their regulatory requirements for holdings of high quality liquid assets in a way consistent with Islamic commercial jurisprudence,” Ramsden said in a speech on Friday.
The new facility will strengthen the UK as a global financial hub, he said.
The new subsidiary will be called the Bank of England Alternative Liquidity Facility, Ramsden said. A proposal for creating the facility was published last year.
The BoE building stands in the City of London. The new liquidity facility is seen strengthening the UK as a global financial hub.
