Islamic banking has grown rapidly across the world in the past 25 years, with major centres established in the Gulf and the Far East. London, too, has become an important centre for wholesale Islamic products, such as LME mudaraba trading and sukuks, which are traded by a range of international banks. These products are relatively uncomplicated from a regulatory standpoint – many, such as ijara leases, are not regulated by the Financial Services Authority (FSA). But there has been no outlet on the retail side, until now, for Islamic savings products in the West. Yet the potential market is quite large. There are about 1.8 million Muslims living in the UK, accounting for 3% of the population, as well as a further half a million Muslim visitors annually.
Since the early 1990s, the Bank of England and then the FSA have held a fairly active watching brief on Islamic banking. Eddie George, the former governor, recognised early on that Islamic banking was a major development which Western regulators should understand and work alongside.
