Bahrain launches wakala liquidity tool for Islamic banks

Dubai: Bahrain’s central bank has launched a new liquidity management tool for Islamic banks, part of efforts by the Gulf Arab economies to put Sharia-compliant finance on a level playing field with conventional banking. The one-week wakala contracts, offered to Islamic retail banks every Tuesday, will allow the banks to deposit excess funds with the central bank, which will invest their money in portfolios containing sukuk. The contracts mean Islamic banks can invest liquidity with the central bank in a similar way to conventional banks, Shaikh Salman Al Khalifa, the central bank’s executive director for banking operations, said in a statement on Wednesday.