Muscat – The Central Bank of Oman (CBO) has launched an electronic system to provide Sharia-compliant Rial Omani liquidity management instruments for Islamic banking entities in the sultanate.

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 line with regulatory requirements and Sharia principles. Two liquidity provision instruments have been introduced at this stage: Qard Hassan and Restricted Mudaraba.

The CBO will provide liquidity under these instruments for use by Islamic banking entities against their holdings of approved Sharia-compliant securities as collateral. Through the Qard Hassan instrument, the CBO will supply liquidity to Islamic banking entities during the business day, based on a Qard Hassan contract. Meanwhile, the Restricted Mudaraba instrument offers short-term liquidity for investment in Sharia-compliant transactions.

The system also facilitates the issuance of Sharia-compliant government securities, such as Islamic treasury bills and sukuk, as well as other liquidity absorption instruments 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, providing a broad range of Sharia-compliant liquidity management instruments and serving both monetary and fiscal policy objectives. It is fully integrated with other national financial market infrastructure systems, including the Real Time Gross Settlement (RTGS) and the Muscat Clearing & Depository systems.

The launch of the electronic system marks a significant milestone in the CBO’s ongoing efforts to provide Sharia-compliant liquidity management instruments to Islamic banking entities, which began with the introduction of the USD Wakala Money Market instrument in December 2022.