British prime minister David Cameron is set to unveil plans for the country to sell Shariah-compliant sovereign debt, in what would be a first outside the Muslim world.
Extracts of a speech released by Cameron’s office revealed that he will announce plans for the UK to sell Islamic bonds, known as sukuk, and create an Islamic market index on the London Stock Exchange.
The bonds’ principal will be about £200m ($320m), the prime minister will say during a speech at today’s World Islamic Economic Forum in the British capital.
The plan would make the UK the first government in the West to issue a sukuk, which are common among corporate entities in the Muslim world. They differ from traditional bonds in that they do not pay interest, which is outlawed by Shariah, and are generally tied to underlying assets or cashflow.
“This government wants Britain to become the first Western sovereign to issue an Islamic bond,” Cameron will say. “Already London is the biggest centre for Islamic finance outside the Islamic world. And today our ambition is to go further still. Because I don’t just want London to be a great capital of Islamic finance in the Western world, I want London to stand alongside Dubai as one of the great capitals of Islamic finance anywhere in the world.”
According to a report by PricewaterhouseCoopers published in July, Islamic financial assets are currently growing by about 17 percent every year, and will reach $2.67 trillion by 2017.