London to issue sharia complaint debt?

The government is looking into issuing its first shariah-compliant bond in a bid to boost London's position as a centre for Islamic finance, Treasury minister Ed Balls said on Monday.

The Treasury estimates Islamic finance assets worldwide are worth over $250 billion (125 billion pounds), and the market is growing rapidly, as financiers angle for cash-rich investors from the Middle East.

Balls said the Treasury and Debt Management Office would look into the cost and benefits of the government issuing Islamic financial products in the sterling market, and publish the results of the study by the end of the year.

"I believe there are great potential advantages for the UK government issuing shariah-compliant government debt," Balls said. "The feasibility study will also be assessing the opportunity for issuing such instruments, taking into account the government's debt management objectives."

The government-backed National Savings and Investments has also been asked to look into making such products available to the public, Balls added.

-Government mulls issuing Islamic bonds