More Islamic finance products needed

A wider variety of Islamic finance instruments would make it easier for monetary authorities to intervene in that market to control liquidity, Kuwait's central bank governor said on Tuesday.

Speaking at a conference on Islamic finance in London, Sheikh Salem Abdul Aziz Al Sabah said: "We need to develop... more instruments to provide more investment opportunity for the public... and in order for central banks to use such kind of instruments to intervene in the market for the sake of regulating liquidity."

"[There is a] need of having sovereign sukuk, those which provide sufficient cushion for monetary authorities to play a role in market operations in the Islamic banking."

Sukuk is an Islamic bond backed by physical assets from which returns are paid to bond holders rather than interest. (Reuters)