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Malaysia to start cross-border clearance platform for
Shariah-compliant bonds
Thursday July 21, 2011 03:52:46 PM,
Agencies
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Jakarta:
Malaysia intends to start cross-border clearance platform for
Shariah-compliant bonds, or sukuk, around the same time, Bank
Negara Malaysia Governor Zeti Akhtar Aziz said in an interview in
Jakarta July 18. The initiatives are part of a plan to help fill
gaps in the $1 trillion global Islamic finance industry.
“Islamic banks need to have scale to undertake cross- border
transactions,” Zeti said.
"They need top quality talent, they
have to be able to invest in technology and they have to build up
the network throughout the world. All this will be costly unless
you have scale. That’s why there’s interest to form such a bank",
he added.
The Islamic finance industry lacks a commercial institution
capable of handling large scale deals that conform to the
religion’s ban on interest payments. Demand for services complying
with Shariah law is increasing as the wealth of the world’s 1.6
billion Muslims rises, spurred by Asian economic growth and
crude-oil income in the Persian Gulf.
Malaysia also plans to issue a license for an Islamic “mega bank”
in the third quarter of this year to help mobilize funds for
businesses around the world, Zeti said in the interview.
The mega-bank will be jointly established by a consortium of
shareholders from different countries, he said, without providing
names. It will be formed by institutions from Asia and the Middle
East and have a capital of at least $1 billion, she said in
October. The central bank had planned to award the license last
year.
“This is to facilitate efficiency in the transaction, otherwise
foreign currency sukuk would have to be cleared out of different
time zones,” she said. “We can now have it within our time zones.”
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