GLOBAL: As Luxembourg
forges ahead to establish itself as the leading Islamic finance hub for
Europe, the Grand Duchy is assertively working on creating stronger
relationships with key Islamic markets, particularly the UAE as
demonstrated by its recent visit to Dubai.
Headed by the Crown Prince of Luxembourg, Prince Guillaume, and
accompanied by Crown Princess Stephanie, the financial delegation was led
by finance minister Pierre Gramegna with the objective of fostering
closer ties with the leading financial center of the Middle Eastern
region, with Islamic finance top on the agenda.
“This visit follows closely on our visit to the UAE in October last year,
during which we signed an MoU on Islamic finance and banking with the
minister of finance of the UAE, as well as updating our double tax treaty
with the UAE,” explained Gramegna to IFN. “The purpose of this visit is
to cement our relationship by the presence of the Crown Prince and Crown
Princess of Luxembourg and to further work on some of the topics foreseen
in the MoU.”
The development of Islamic finance in Europe, while steady, is relatively
slow as compared to its Middle Eastern and Southeast Asian counterparts;
however, there has been significantly more traction in the European
continent in recent times, with Luxembourg (and the UK) at the helm of
this growth. While mainly known for its impressive asset management
capabilities and as the world’s largest Islamic funds domicile in Europe
(with over 100 Shariah investment funds created in the Grand Duchy
itself), Luxembourg is also driving the proposition that it is
well-positioned to drive growth in all segments of the industry. This is
evident by the government’s inaugural sovereign Sukuk issuance last year;
and also a push by industry players for a fully-fledged Islamic bank in
Luxembourg (Eurisbank).
Although Islamic banking institutions are not present in continental
Europe, however the latent potential is significant as the potential
customer base of the region is approximately 20 million Muslims – and
Luxembourg could be pivotal in facilitating the industry in tapping this
market. Gragmena confirms this: “With a Luxembourg universal banking
license and a European passport, an Islamic bank established in
Luxembourg could develop its activities on a purely cross-border basis or
by establishing branches in the target countries out of their Luxembourg
subsidiary.”
As Luxembourg (both at the government and industry level) assume a more
active role in the Islamic finance scene and with its firm commitment to
building a strong relationship with the UAE (as well as other
jurisdictions), market players could expect to witness the growing
internationalization of Islamic finance in the near future.
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