The most popular form of Islamic finance is commonly referred to as sukuk – wholesale, asset‐based capital market securities. The purpose of this paper is to enhance the general understanding of essential policy considerations in the creation and development of sukuk markets.
This policy paper reviews the key developments in the sukuk market and informs a debate about challenges and opportunities going forward. The paper presents a qualitative analysis of economic, regulatory and legal issues that warrant consideration.
The paper finds that while the sukuk market continues to generate strong interest by new issuers in Muslim and non‐Muslim countries alike, some critical constraints arising from continued legal uncertainty and regulatory divergences still need to be overcome. As issuers weigh the costs and benefits of sukuk issuance in a broad policy context, continued efforts will be required to overcome a series of economic, legal and regulatory issues.
The paper presents, for the first time, a structured analysis of sukuk markets aimed at identifying key considerations for sovereign debt managers, especially in non‐Muslim countries.
