Islamic banks will be offered a range of new money-market instruments in coming months, allowing lenders to earn larger returns from excess cash stored at central banks or locked into longer-dated securities.
The International Islamic Liquidity Management Corp., which is being set up in Kuala Lumpur by 11 central banks, will sell its first short-term bills in dollars early next year, Malaysian central bank Governor Zeti Akhtar Aziz said Oct. 28. Prime Rate Capital Management LLP plans to start a $250 million Islamic cash fund in January, Chief Executive Officer Christopher Oulton said in a Nov. 23 interview. The U.A.E.’s central bank auctioned its first Shariah-compliant certificates of deposits on Nov. 10.
Demand for services complying with Shariah law is increasing about 15 percent annually and assets under management may almost triple to $2.8 trillion by 2015, according to the Kuala Lumpur-based Islamic Financial Services Board, a standards body for the industry. Money-market products will allow banks to invest idle cash more profitably, Paris-based Anouar Hassoune, an analyst at Moody’s Investors Service, said in an e-mailed response to questions on Dec. 1.
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