The Islamic finance industry has made great strides since the onset of the global financial crisis. Assets have passed the $1000bn mark, profits have risen sharply and the industry has been feted for pushing into new markets and sectors. Yet it continues to be dogged by one recurring question: when will it address the short-term liquidity management of Islamic financial institutions on a global basis?
To date, the industry’s expansion has been noticeably hampered by a shortage of highly liquid, investment-grade financial instruments that Islamic banks can trade to manage their short-term funding needs. So the long-awaited debut $490m sukuk issuance in August 2013 by Malaysia International Islamic Liquidity Management (IILM) Corporation – a body backed by central banks from the Middle East and Asia – marked a significant milestone, while setting several records in the process.