CBO
Launches E-system to offer Sharia-compliant Liquidity Management
Instruments

Muscat,
9 Sep (ONA) — The Central Bank of Oman (CBO) launched an electronic system designed
to provide Sharia-compliant Rial Omani liquidity management instruments for
Islamic Banking Entities in the Sultanate of Oman

The
Islamic Liquidity Management products and associated contracts have been
reviewed and approved by the High Sharia Supervisory Authority (HSSA) at the
Central Bank of Oman, in accordance with regulatory requirements and Sharia
principles. Two liquidity provision instruments are introduced at this stage to
Islamic Banking Entities (IBEs), namely: Qard Hassan and, Restricted Mudaraba.

The
Central Bank of Oman will provide liquidity under the above-mentioned
instruments to be utilized by IBEs against their holdings of acceptable Sharia-compliant
securities as collaterals. Through Qard Hassan instrument, the Central Bank of
Oman will provide liquidity to IBEs during the business day, based on Qard
Hassan contract. While via the Restricted Mudaraba instrument, the Central Bank
of Oman offers short-term liquidity to the IBEs, for investment in Sharia-compliant
transactions.

It
is noteworthy that the system also facilitates the issuances of Sharia-compliant
Government securities, such as Islamic Treasury Bills, Sukuk, as well as other
liquidity absorption instruments which are to be introduced at a later stage.

The
newly launched system is considered the first of its kind in the Middle East
and North Africa region, as it provides a broad range of Sharia-compliant liquidity
management instruments, thus serving both monetary and fiscal policy objectives.
The system is fully integrated with other national Financial Market
Infrastructure systems, such as the Real Time Gross Settlement (RTGS) as well
as Muscat Clearing & Depository systems.

It
is important to highlight that the launch of the electronic system marks an important milestone, in continuation of the
efforts undertaken by the Central Bank of Oman in providing Sharia-compliant liquidity
management instruments to the IBEs, which started with the introduction of the
USD Wakala Money Market instrument in December 2022.

—Ends/AG