UK: Building on
the success of its inaugural Sukuk program, the UK is moving
progressively in its efforts to anchor itself as the leading Islamic
finance center for the western world as its economic secretary to the
Treasury, Andrea Leadsom, spells out further initiatives towards that
ambition.
Leadsom yesterday revealed that the sovereign’s export credit agency, UK
Export Finance (UKEF), is working towards extending Shariah compliant
support to British exporters in the coming months. UKEF expects to
provide Shariah compliant guarantee for Sukuk to be issued by an Airbus
customer, making it not only the first time UKEF would provide such
support but also marks the first Islamic debt issued for the aviation
sector to receive UKEF’s aid.
Commenting on this initiative, Leadsom said: “A key part of the
government's long-term economic plan is making Britain the western hub
for Islamic finance and the undisputed center of the global financial
system. The UK has already created one of the most attractive regulatory and
tax systems for Islamic finance anywhere in the world, and the huge
success of the UK's sovereign Sukuk earlier this year was a significant
milestone in the development of the global Islamic finance industry.”
In addition to UKEF’s impending move into the Islamic capital markets,
the UK’s central bank, Bank of England, also reaffirmed that it is
considering establishing Shariah compliant liquidity management
instruments to assist domestic Islamic banks in meeting their liquidity
obligations, a move welcomed by both the economic secretary and industry
players. Support from the Bank of England is expected to bolster the
operations and capacity of UK’s Islamic banks in providing a more diverse
range of services and products to customers.
The commitment demonstrated by UK authorities resonates well with wider
industry efforts (see IFN Report Vol. 11 Issue 14). Last week the UK
Chartered Institute of Public Finance and Accountancy (CIPFA) held its
inaugural Islamic finance roundtable which saw the attendance of the HM
Treasury, local authorities, banks and law firms. Believing that local
authorities and other public bodies should examine other potential
borrowing options in order to diversify the funding pool, CIPFA has
committed itself to facilitate work with Islamic finance providers in
order to explore Shariah compliant products as a viable source of local
government funding.
These developments are indeed encouraging as it proves that the UK does
mean serious business in the Islamic financial space beyond the highly
symbolic Sukuk issuance, and more importantly, it keeps the momentum
built by the inaugural Islamic debt program going strong. It will be
exciting to see how it pans out for the UK.
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