NICOSIA – Immersed in a deep economic crisis, Cyprus now wants to set up an Islamic finance hub to spur growth and recovery on a divided island.
The Cyprus Investment Funds Association is calling for the government to sell sukuk to lure investment from the Middle East, CIFSA’s President, Angelos Gregoriades, said in an e-mail interview with Bloomberg.
The Cyprus Stock Exchange wants to encourage the listing of Shariah-compliant bonds and sees potential for the nation of 1.2 million to become a “gateway to the European Union” for Islamic investors, CSE CEO Nondas Metaxas said.
The island, where Muslims make up 18 percent of the population and Turkey has kept troops since the 1974 conflict, is being asked by the European Union to tackle a bad loan ratio of 45 percent after a joint bailout with the International Monetary Fund in March 2013.
Cyprus would follow a sukuk sale by the UK and a planned offering from Luxembourg, as Ernst & Young forecasts the industry’s global assets will double to $3.4 trillion by 2018.
“Islamic finance is considered as a credible alternative source of funds in light of the credit crunch worldwide,” the stock exchange’s Metaxas said.
“The CSE’s aim is to develop a new product in its markets but at the same time to help Cyprus overcome the present difficult and challenging economic situation.”
The move comes at a time when the fanatics of the Islamic State in Syria and Iraq are conducting a wave of terrorism and savagery which has spurred worldwide condemnation and increased tension with critics of Islam, particularly anything to do with Shariah law.