Move To Develop Islamic Finance Market

Moves are underway to develop an international Islamic finance market to provide better opportunities and alternatives to investing excess liquidity at Islamic financial institutions and banks. Bahrain and Malaysia have joined hand with Jeddah-based Islamic Development Bank to develop Islamic finance market.

Bahrain Monetary Agency signed a memorandum of understanding (MOU) with the Offshore United Centers in Labuan, Malaysia and IDB. The move is to provide more opportunities and alternatives for investing excess liquidity at Islamic financial institutions and banks. It is also aimed at affirming the intention of the three parties to work together for developing an international Islamic financial market. The MOU was signed by BMA acting executive director for banking operations Khalid Abdullah Al Bassam, Malaysian Central Bank governor Ali Abdul Hassan Suleiman and chief executive of Islamic Development Bank Ahmed Mohammed Ali.

The initial concept is to focus on the fact that the authorities should adopt necessary procedures for the development of an Islamic financial market, where government and non governmental Islamic tradeable bonds could be issued in addition to developing secondary market for trading these bonds among Islamic banking institutions.

It also stresses the establishment of a liquidity fund in which Islamic financial institutions would take part to ensure the availability of liquidity when required, and enable the fund to assume a major role as a last resort for Islamic financial banks and institutions. The setting up of this market will be a significant step towards bolstering the Islamic banking activity in Bahrain
and elsewhere.