Islamic Banks and Central Banking

15 Pages Posted: 18 Oct 2017

See all articles by Arshadur Rahman

Arshadur Rahman

Bank of England - Sterling Markets Division

Date Written: September 15, 2017

Abstract

Islamic banking is a growing sector of the financial services industry, but Islamic law (Shari’ah) does not permit the payment or receipt of interest. This poses a problem for central banks that only offer interest-bearing liquidity facilities to banks. This article explores the ways in which a central bank can establish a liquidity facility that is compliant with Shari’ah, along with the model we have decided to adopt for our new Shari’ah-compliant facility.

Suggested Citation

Rahman, Arshadur, Islamic Banks and Central Banking (September 15, 2017). Bank of England Quarterly Bulletin 2017 Q3, Available at SSRN: https://ssrn.com/abstract=3054465

Arshadur Rahman (Contact Author)

Bank of England - Sterling Markets Division ( email )

London
United Kingdom

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