BoE Opens Alternative Liquidity Facility; Aiming to Level Playing Field for UK Islamic Finance Sector

The United Kingdom’s (UK) central bank, Bank of England (BoE) has opened the Alternative Liquidity Facility (ALF) on the 2nd of December 2021, which has taken deposits from participating UK-based Islamic banks for the first time. The ALF is a non-interest-based deposit facility designed to provide banks that cannot pay or receive interest with a similar ability as conventional banks to place funds at the BoE.

Why it Matters?

According to Rhys Phillips, Head of Sterling Markets, BoE, the ALF will help the UK Islamic finance sector to compete with conventional peers and will further bolster the UK’s role as the leading international financial centre for Islamic finance outside the Muslim world. The ALF is a key step in levelling the playin...