The new facility will provide UK Islamic banks (and indeed any other UK banks with formal restrictions on engaging in interest-based activity) with greater flexibility in meeting HQLA requirements, enabling them to hold a reserves-like asset in a non-interest based environment. The ALF will be structured as a wakalah or fund-based facility: a commonly used model in Islamic finance (Chart 4). In simple terms, that means that participant deposits will be backed by a fund of assets, the return from which, net of hedging and operational costs, will be passed back to depositors in lieu of interest. The strengths of this model include its relative simplicity – conceptually and practically – and its flexibility to accommodate future changes in what is a still fast-developing market. The ALF will grow as the UK Islamic bank sector grows. And it will be well placed to exploit the growing diversification of available HQLA-eligible sukuk assets. Over the coming months, we will finalise legal documentation, complete our operational testing and begin the onboarding process for eligible applicants. Firms should expect to commence this work from January 2021. Once operational, the ALF should help put the UK Islamic finance sector on a more level footing with the rest of the market, giving firms here greater flexibility in meeting their liquidity requirements, and helping them to compete with conventional peers while staying true to their founding principles. 18  https://www.bankofengland.co.uk/-/media/boe/files/paper/2016/establishing-shariah-compliant-central-bank-liquidity-facilitiesconsultation.pdf and https://www.bankofengland.co.uk//media/boe/files/paper/2017/sclf_consultationpaper2017.pdf?la=en&hash=E6C1BCEE76AF3812D1985B911E0D29A0DA8A5043.

Investment, however, will be worse than we expected before. The external scenario continues to present risks and new volatility episodes will probably occur in the financial markets. Now let me turn to our Financial Stability Report (IEF). Financial Stability Report Our Financial Stability Report is released in June and December of each year, containing recent macroeconomic and financial developments that might affect the Chilean economy’s financial stability. This Report’s external scenario includes the same risks I just described when examining the Monetary Policy Report, particularly with respect to the US monetary policy and the evolution of the Chinese economy. In the Financial Stability Report we also present the Brexit-related risks, as well as the difficulties of European banks to resolve their non-performing portfolio problems – legacy of the global financial crisis – in a scenario of weaker world growth estimates and the global banking industry adapting to new regulatory standards. Most 4  BIS central bankers’ speeches  recently, this scenario has become more complex because of banks’ profitability being threatened by low interest rates. Another risk we need to monitor in the coming months has to do with the prices of commodities and their possible impact on the countries exporting them. Although lately these prices have tended to stabilize, they are still lower than they were only a few years back and might endanger the fiscal revenues of some economies.