Central banks move to bolster liquidity in Islamic paper

Eleven central banks and monetary authorities are teaming up with Islamic multilateral organisations in an effort to bolster supply of highly rated, short-term Islamic paper through an entity called the International Islamic Liquidity Management Corp. The effort is aimed at bolstering liquidity and reducing risk in Islamic finance. But a single Asian currency may be a stretch too far, says Malaysian central bank chief

Malaysia is set to play a prominent role in promoting cross-border liquidity management by acting as the headquarters for a new multilateral corporation that will promote the issuance of short-term Islamic paper, according to Zeti Akhtar Aziz, governor of Malaysia's central bank, Bank Negara Malaysia.

The new body, the International Islamic Liquidity Management Corp (IILM), will be based in Kuala Lumpur and is set to be operational during the first half of 2011. It is tasked with promoting cross