UK GOVERNMENT CONSIDERS REVIVING THEIR SHARIA FINANCE MARKET AGAIN

Businessweek reported last week that the British government is thinking of approving more sharia banking:

The U.K. government is considering reviving plans to sell Islamic bonds as part of an initiative to boost Britain’s role as a center for Shariah-compliant financing.

Treasury Minister Greg Clark and Sayeeda Warsi, a [Muslim] minister in the foreign office, are leading a working group to raise the profile of the Islamic finance industry, the Treasury said in an e-mailed statement today. Among items discussed at today’s inaugural meeting was the sale of Islamic bonds, said Shabir Randeree, chairman of DCD London & Mutual Plc in London and a member of the taskforce.

“What we will be looking at is whether a sovereign sukuk or an infrastructure type of instrument will be more appropriate,” Randeree said in a telephone interview from London.

The U.K. announced plans five years ago to become the first Western government to issue bonds compliant with Islamic law only to disband the initiative in 2011 when the Debt Management Office said the securities don’t “provide value for money.” The government is renewing its push as the global market for Islamic-compliant financing is set to double to $3 trillion by 2015, according to Standard & Poor’s.

The market for bonds that comply with Islam’s ban on interest is expanding as borrowing costs plunge. The average yield on sovereign sukuk tumbled 126 basis points, or 1.26 percentage points, last year to 2.65 percent, according to the HSBC/Nasdaq Dubai Sovereign US Dollar Sukuk Index. The yield was 2.83 percent March 7, the index showed.

What a shame that England sees nothing wrong with this dangerous type of market. But then, if they're so weak-kneed about Islam itself, it shouldn't come as any surprise they consider this legitimate as well.

Firstpost has more:

The British government has launched a new campaign to promote London as a centre for Islamic finance. The UK’s first Islamic Finance Task Force is aimed at cementing the city’s status as the Western hub and preferred choice for the Muslim world to invest in and do business with.

“This government’s priority is to make sure that Britain is open for business. The Islamic Finance Task Force is a perfect example of our ambition to promote London as a leading financial centre and attract inward investment for the wider economy,” said Greg Clark, financial secretary to the UK Treasury and co-chair of the task force.

In an attempt to counter growing competition from global Islamic hubs such as Dubai and Kuala Lumpur, the new task force will support the development of the UK’s Islamic finance sector and increase inward investment. [...]

“We expect the global market for Islamic financial services to experience significant growth over the coming years, but feedback from decision makers in the Middle East and South-east Asia suggests there is a lack of awareness of the UK industry and that we should be doing more to promote the sector,” said Baroness Sayeeda Warsi, senior minister of state at the UK’s Foreign and Commonwealth Office and the second co-chair of the task force.

Wow, they're just SO concerned about competition, aren't they? In cases like these, it only leads to disaster in the long run. And was there ever any competition? They've actually got it backwards; the UK wants to compete with those Islamic countries in sharia banking, and at the same time, are preparing the UK for additional sharia. Warsi herself is Muslim, and this is something she's undoubtably eager to go forward with.