Business | Banking
Bahrain central bank plans sukuk liquidity management tool
The Central Bank of Bahrain said on Monday it plans to launch an Islamic financial instrument aimed at providing a liquidity management tool to Islamic financial institutions this month.
- Agencies
- Published: 19:17 June 9, 2008
Manama: The Central Bank of Bahrain said on Monday it plans to launch an Islamic financial instrument aimed at providing a liquidity management tool to Islamic financial institutions this month.
The Islamic Sukuk Liquidity Instrument (ISLI) would enable financial institutions, both conventional and Islamic, to access short-term liquidity against Bahraini government Islamic leasing bonds, or ijara sukuk, the central bank said in a statement.
"The availability of instruments such as ISLI will help create a deeper and more liquid sukuk market, which requires a variety of short- and long-term instruments to enhance Islamic banks' ability to efficiently manage their liquidity," it said.
"It will also stimulate and promote a more active Islamic financial market."
The tool has been jointly developed by the central bank and the Bahrain-based Liquidity Management Centre (LMC), an organisation which provides asset sourcing, structuring and market-making capabilities, it said.
The tripartite structure would enable financial institutions holding dinar-denominated ijara sukuk to engage in transactions aimed at accessing short-term liquidity, it said.
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