A spokesperson for the UK Debt Management Office explained that unlike conventional bonds, a sukuk is an investment certificate that demonstrates ownership of a specific underlying asset.

“The underlying asset must comply with sharia law. As such, they will not involve haram (forbidden) activities, such as alcohol, pork or gambling,” he stated.

By offering such products the market for retail Islamic financial products would grow, as the existing offering tends to be limited to current accounts and home finance, the expert said.

Issuing government sukuks would help to create a “sharia-compliant asset” to enable the establishment of Islamic retail institutions, he added.

Last week, the government published a consultation paper seeking views on the advantages and risks of issuing a sukuk.

According to the government, Islamic banking and finance now has a presence in more than 70 countries around the world.

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