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Based on market feedback and internal analysis, BoE is minded to implement a deposit facility using a fund-based model. This is one of the two deposit models originally outlined in its 2016 consultation. The new consultation paper provides more technical detail on how this model would work in practice.
BoE is seeking views from the UK Islamic banks in particular, but also from interested parties more generally till Tuesday 23rd May 2017.
Unless any material impediments arise, work will then start on implementation. Work to integrate the facility into its systems and processes, and to create a set of standardised terms and contractual documentation, will start after the consultation closes. However, the deposit facility is unlikely to be ready before Spring 2018.
Once the deposit facility is operational and has been evaluated, BoE may start work on an accompanying Shari’ah-compliant liquidity insurance facility. However, the resource requirements for further work will necessarily be considered in the context of BoE‘s wider priorities.