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Home > Markets and Payments > Shari'ah compliant facilities
 

Shari'ah compliant facilities

As part of its strategy to broaden liquidity provision to the market, the Bank of England commenced work in the second half of 2015 to assess the feasibility of establishing a Shari’ah compliant facility.

The Bank recognises that Islamic banks are currently unable to use the Bank's existing liquidity facilities. In particular, the Sterling Monetary Framework is the mechanism by which the Bank sets interest rates, and interest-based facilities are not deemed Shari'ah compliant.

The Bank’s 2017 consultation exercise has now closed, but the paper can still be accessed at the link below. This paper confirmed the Bank’s intention to establish a Shari’ah compliant deposit facility using a fund based model, and sought views on certain aspects of the facility. The Bank has now commenced work to implement this facility, though as a complex and medium term project it is unlikely to be ready before Spring 2018.

Any queries on this initiative, or on the Bank’s work on Islamic finance related matters more generally, should be e-mailed to: islamic.finance@bankofengland.co.uk. Further updates will be posted on this webpage in due course. 

 

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