New money market to be launched

The Bahrain Monetary Authority is working on an Islamically-acceptable money market in which scondary instruments, backed by assets such as schools and hospitals, can be traded. These bonds would be acceptable to Islamic scholars, proponents argue, because they fund socially desireable projects. There are doubts, however, that the Islamic banking system is large enough for the market in Islamic bonds to reach critical mass and be successful. The main concern right now is that Bahrain is over-supplied with Islamic banks and that mergers should be taking place. At least one major western bank is about to close its Islamic subsidiary due to lack of profits.