Lack of liquid assets ups demand for instruments

Islamic banking still faces several challenges: a need for uniformity on shari`a issues, insufficient liquidity management schemes, and a need for an Islamic interbank system.. Islamic banking and finance will not grow further without a more efficient capital market. Secondary markets are needed and can be created by greater market liquidity and price transparency. The liquid inter-bank market must grow and develop to a more global scale to better accommodate medium and long term investments. Islamic banks must move away from bilateral murabaha trading, and focus more on liquid assets, utilizing Novation and Financial Takaful in order to also adhere to shari`a guidelines.