The UK's economic secretary, Ed Balls, has outlined measures to establish the UK as a leading global center for Islamic finance, arguing that the government has an important role in helping the industry overcome barriers to the development of Islamic finance in the UK.
The International Islamic Financial Market was established in 2002 to promote and develop global cross-border market trading of Islamic financial products. As Sharia law requires that Muslims do not pay or receive interest, the government and industry are working to develop Islamic products that are economically equivalent to conventional products but without the element of interest.
In order to support the development such products, the UK government has announced that there will be legislation in the 2007 Finance Bill to facilitate the UK issuance and trading of Sukuk, the Islamic equivalent of conventional securitizations.
The government also commented that guidance on Diminishing Musharka, the Islamic equivalent of a loan repaid in installments, and Takaful, a Sharia-compliant form of insurance, would be published alongside the 2007 budget.
The government has also voiced its support for recent industry developments, including a memorandum of understanding signed between the International Capital Markets Association and the International Islamic Financial Market to set standards for Islamic Capital Markets.
In addition, it commended the October 2006 launch of the Islamic Finance Qualification, a joint initiative between the Securities and Investment Institute and the Ecole Superieure des Affaires, a Middle East business school, to develop qualifications in Islamic finance.
Mr Balls commented: Today is an example of public and private sectors working together to fulfill our shared ambition of creating major international markets in Islamic finance with London as their center.