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UK keen to boost Islamic finance
T. Ramavarman / 21 May 2010
KUALA LUMPUR — Prince Andrew, the Duke of York and the UK’s Special Representative for International Trade and Investment, has said that London was set to play a major role in the growth and further progress of the Islamic finance sector.
“The UK is already the largest centre in the Western world for Islamic finance and eighth globally. The new UK Islamic Finance Secretariat (IFS), the first Islamic finance trade body in the UK, was launched in London at the end of March with the aim of coordinating and promoting development of Islamic finance in the UK,” he said while delivering a special address at the WIEF on Thursday.
“It (the IFS) will be looking to build on, for example, the 22 Islamic banks in operation in London. Twenty sukuk issues have already been issued on the London Stock Exchange which have raised $ 11 billion, and there are 20 law firms in London which provide specialist services in Islamic finance,” he said.
HSBC and Standard Chartered, two leading British banks, have substantial Islamic Finance operations in Malaysia where they have direct access to one of the world’s leading Islamic finance markets. They are also tapping into Malaysia’s skilled human capital available in the Islamic finance sector for making their operations a success, he said.
The potential size of Islamic finance market is huge. According to Standard & Poor’s Ratings Services, Shariah-compliant assets reached $400 billion in 2009, a significant amount during a tremendously tough year for the global economy. And with improved economic conditions, there must be scope for prolonged growth in future, Prince Andrew said.
According to him, there is now a growing recognition in London on the need for striking the right balance between risk-taking and the requirement to provide capital to stimulate business in this difficult economy.
“Islamic financial instruments are important tools in the armoury of a financier in order to achieve that balance. Fortunately, the worst of the global recession seems to be behind us, although it could be a bumpy ride for a while to come. Islamic finance will play its part in getting global finance back on track and will continue to be used to do business in the future.”
Dr Zeti Akhtar Aziz, the Governor of Bank Negara Malaysia — Malaysia’s Central Bank — disclosed that the Task Force on Islamic Finance and Global Financial Stability has submitted its report identifying eight areas of further development in the Islamic financial architecture to enhance its ability to deal with a more challenging environment.
These areas include ensuring effective implementation of the prudential standards, development of systemic liquidity management infrastructure, establishment of strong financial safety nets and putting in place effective crisis management and resolution frameworks.
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