Muscat: The Central Bank of Oman (CBO) has introduced an electronic system aimed at providing Sharia-compliant Rial Omani liquidity management instruments for Islamic Banking Entities within the Sultanate of Oman. This development marks a significant step in enhancing the country's Islamic financial infrastructure.

According to Oman News Agency, the Islamic Liquidity Management products, along with their associated contracts, have undergone review and received approval from the High Sharia Supervisory Authority at the Central Bank of Oman. This approval ensures compliance with both regulatory standards and Sharia principles. At this initial stage, two liquidity provision instruments have been introduced for Islamic Banking Entities: Qard Hassan and Restricted Mudaraba.

The Central Bank of Oman will extend liquidity through these instruments to Islamic Banking Entities, utilizing acceptable Sharia-compliant securities as collateral. The Qard Hassan instrument allows liquidity provision 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.

Additionally, the system supports the issuance of Sharia-compliant Government securities, including Islamic Treasury Bills and Sukuk, with more liquidity absorption instruments anticipated to be introduced later. This newly launched system is unique to the Middle East and North Africa region, offering a comprehensive range of Sharia-compliant liquidity management instruments that align with both monetary and fiscal policy goals.

The system's integration with other national Financial Market Infrastructure systems, such as the Real Time Gross Settlement and Muscat Clearing and Depository systems, further underscores its significance. This launch represents a pivotal milestone in the Central Bank of Oman's ongoing efforts to provide Sharia-compliant liquidity management instruments, building on initiatives that began with the introduction of the USD Wakala Money Market instrument in December 2022.