The group, which was first announced in October 2025 when just 10 banks were ⁠involved, also eyes expanding into stablecoins pegged to other G7 currencies, with the euro emerging as the top priority.

Stablecoins, which are used to move money around the world in the form of cryptocurrency, have seen a revival in interest, especially after the rebound in crypto prices in 2024.

United States President Donald Trump’s support for the sector has further sparked the idea of using blockchain in the mainstream financial system.

The financial group will compete with a separate consortium of 37 financial institutions, which formed ‌a ⁠company called Qivalis, with the latter planning to launch a euro-pegged stablecoin later this year.

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Another tailwind has been President Donald Trump’s recent appeal to the US Congress to pass a bill, called the “Clarity Act,” that would bring clearer definitions to the growing sector. After the speech got aired last week, Bitcoin, the world’s largest cryptocurrency, has gone up 16%.

It was last at USD 80,323.24 in Asian hours, having earlier touched USD 81,237.94, its highest level since mid-May. Bitcoin is up 28% so far in August, ⁠set for its biggest monthly gain since November 2024.

As per the analysts, cryptocurrencies got a big boost after the US Treasury’s decision to buy back more long-dated bonds to help cap the gains in the long-end yields, a move that has led to the US dollar bearing the brunt of investor anger.

In his latest media address, Treasury Secretary Scott Bessent has stressed that the Treasury will continue with its regularly scheduled debt auctions, including for long-dated bonds, despite the move to increase buyback sizes of 10- to 30-year securities.

He further added that the Treasury hasn’t purchased any bonds yet in the enlarged buybacks, which will start on September 10 for 10- and 20-year securities.

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Will the rapid normalisation of POS and digital wallets make banknotes a thing of the past? Not so easily, claims another study from the Official Monetary and Financial Institutions Forum (OMFIF), as per which, digital payment ecosystem is useful till the presence of electricity, connectivity, and authentication servers. If one among them goes down, or all the three go down together, physical cash becomes the last line of defence.

The April 2025 blackout on the Iberian Peninsula (continental Spain and Portugal), in which the power grid collapsed and telecommunications faltered, entire regions found themselves suddenly cut off from the digital economy. Payment cards did not work. Mobile wallets froze. Online banking was inaccessible. Merchants could not connect to networks. People with ample digital balances were unable to purchase food or fuel. Only those who carried physical banknotes retained economic agency.

Cash is king, but has its weakness

A well-designed monetary ecosystem always treats both physical cash and digital money complementary to each other. While the POS and digital wallets serve the tech-savvy sections of the populations, cash ensures that the elderly, the digitally excluded, unbanked communities, informal workers, and those concerned about privacy still to participate in the digital economy.

Private digital payments provide speed and convenience. CBDCs may provide a modern, stable form of public digital money. But only cash provides a non-digital layer that can sustain economic activity during severe disruptions. It is the monetary equivalent of an emergency generator.

However, physical banknotes also have their share of vulnerabilities, and the prominent among them is counterfeiting. We are talking about the illegal act of creating, copying, or imitating a physical currency, that if left unchecked, can undermine national economies, apart from weakening financial institutions and jeopardising people’s livelihoods.

The introduction of unauthorised, counterfeited money artificially increases the currency supply, which in turn devalues legitimate currency, leading to higher prices and inflation. Individuals and businesses unknowingly accepting counterfeit bills suffer immediate and unrecoverable financial losses, as these notes get confiscated by banks without reimbursement. If the volume of fake cash reaches a critical mass, it lowers the faith among people on the utility of paper money entirely, threatening its function as a medium of exchange and a store of value.

In August 2025, under Europol’s watch, a joint law enforcement operation intercepted the distribution of counterfeit currency through postal services. Nearly one million items got confiscated, including fake euros, US dollars, and British pounds, with an estimated value of over EUR 66 million.

The collaboration between authorities from 18 countries also triggered 102 new investigations targeting criminal networks engaged in currency counterfeiting. Led by Austria, Portugal and Spain, the probe was conducted between October 2024 and March 2025, and uncovered several criminal networks engaged in currency counterfeiting. Most of these networks were operating from outside the EU (European Union), mainly from Asia, but also from America and the Middle East.

Central banks vs counterfeiters

In March 2026, the Swiss National Bank unveiled the new-look Swiss franc banknote designs, featuring native plants, landscapes, and how human life adapts at different altitudes throughout the Alpine nation. The central monetary authority has also utilised a revolutionary three-layer substrate called Durasafe in the next-generation notes, which sandwiches a polymer layer between two outer layers of cotton paper.

This unique base, combined with over 20 advanced security features, makes counterfeiting nearly impossible. The notes have also embedded fibres and security numbers that glow when viewed under UV light, and sections that disappear under infrared light.

Another very good case study has been Singaporean banknotes, that use a blend of advanced physical substrates, intaglio printing, and optically variable devices (OVDs) to prevent counterfeiting. Lower denominations get printed on durable polymer, while higher denominations utilise specialised paper. Genuine notes feature a metallic, reflective kinogram. When tilted, the denomination numeral shifts, and the MAS (Monetary Authority of Singapore) logo transforms into the Singapore lion symbol.

Polymer-made lower denominations also feature an embedded metallic thread, while paper notes utilise an interwoven thread. When held to light, holographic images of the Singapore Lion symbol and MAS logo become visible on the thread.

The MAS logo itself has been printed in a micro-lettering format, which ‘ will be difficult to figure out without a magnifying glass. Specific elements like the serial numbers, chairman’s seal, latent image patches, and denomination numerals have been kept UV-friendly, emitting a bright, distinct glow.

The Bank of England’s proposed new banknote designs, despite being controversial for leaving out historical figures, will be having intricate wildlife photos like bird flapping its winds or a deer running, that in the words of the central bank, will be combined with latest security technologies to prevent counterfeiting.

United States, to commemorate its 250th anniversary, will be launching its ‘Catalyst’ series of redesigned $10 currency, that will incorporate advanced visible and covert machine-readable security features to combat counterfeiting. These new notes will incorporate advanced security features commonly deployed in other developed economies, but never used in US currency. Features like enhanced optically variable devices, sophisticated watermarking techniques, and critically, machine-readable elements specifically designed for high-speed automated authentication.

Keeping in mind the counterfeiters’ shift to generative AI to replicate microprinting and watermark patterns with increasing accuracy, the Catalyst redesign will also be introducing security elements that current counterfeiting technology cannot reproduce.

While central banks are bringing more complex security features like polymer substrates, 3D ribbons, and colour-shifting inks, counterfeiters are adapting as well against these security advancements. They are reportedly using advanced flatbed scanners paired with layer-based graphic software (like altered versions of Photoshop) to isolate, sharpen, and reconstruct complex banknote graphics layer by layer.

Using high-end commercial digital printers, these ‘notes’ are getting reproduced, with ‘fine lines and micro-text’. Counterfeiters are also using chemical solutions to strip the ink off low-value banknotes (such as $1 or $5 bills), followed by the reprinting of higher denominations ($50 or $100) on the original, authentic paper, effectively bypassing security pens and texture tests.

Forgers are even mimicking the extreme-pressure intaglio presses on the notes, by utilising fine-tip glue pens, or selectively applying clear matte lacquer sprays over portraits and text. Makeup kits, specifically eyeshadow and nail polishes, are being used to replicate expensive Optically Variable Ink (OVI), or colour-shifting 3D ribbons.

Last but not the least; to create the security threads, some criminals split thin paper sheets in half, before manually placing a simulated plastic or UV-ink strip inside, and gluing the layers back together.

Making the banknotes secure

Modern-day banknotes are being made from synthetic polymer materials like biaxially oriented polypropylene (BOPP). As compared to paper banknotes, they last significantly longer, have less environmental impact, reduced cost of production and replacement, and, most importantly, more than enough room for inducting abundant security features.

It was the Reserve Bank of Australia (RBA), Commonwealth Scientific and Industrial Research Organisation (CSIRO), and The University of Melbourne, that first innovated and issued the new breed of currency in Australia during 1988. By 1996, Australia switched its physical dollar to polymer banknotes.
Romania was the first country in Europe to issue a plastic note in 1999, and became the third country, after Australia and New Zealand, to fully convert to polymer by 2003.

Polymer banknotes usually have three levels of security. Primary security levels are easily recognisable by consumers, and may include intaglio, metal strips, holograms, and the clear areas of the banknote. Secondary security features are detectable by a machine. Tertiary security features may only be detectable by the issuing authority when a banknote is returned.

Next comes watermarks, one of the basic features to ensure banknotes’ effective documentation and protection for centuries. They are extremely difficult to replicate, as slight deviations in the portrait, or in the motif, raise suspicion in the minds of people and authorities alike.

When it comes making watermarks an iconic shield of defence against the counterfeiters, German company Giesecke+Devrient GmbH, that operates in the fields of digital security, financial platforms, and currency technology, has become a known name. It has developed an array of watermark designs like multitone, highlight and pixel, each of which has a distinct appearance.

These watermarks, if linked together on a banknote, create unambiguous and memorable motifs. Watermark designs often get amplified in printed and applied security features, further helping simplify the currency’s authentication process.

Next, we have ‘Security Thread’, a polymer-based stripe incorporated into banknotes during the papermaking process. The concept came into the picture during the mid-1800s when legendary American papermaker Crane and Co. introduced silk security threads.

In 1940s, the Bank of England wrote a new chapter in banknotes’ security, by proposing metallic threads for shilling banknotes. Since then, security threads have become a widely used authentication method.

Today, more than 90% of banknotes contain security threads, and their design has only become more sophisticated over the years, featuring microtexts, holograms, colour-changing effects, and UV luminosity.

Depending on their location in the paper, security threads can be of three types: Latent (completely embedded within the paper substrate), Diving (thread that weaves in and out, creating a dotted line on the banknote’s surface), and Figure (thread that appears as a series of shaped windows but forms a solid line when viewed in transmitted light). Threads can be of metal without text, metal with microtext, semi-transparent with text, holographic, colour changing, or luminescent under UV light.

Threads also carry magnetic properties, which are detectable by specialised devices with magneto-optical sensors. There can also be floating images in these security threads, that creates a motion effect (when the note is tilted, the image appears to move or shift). Every security thread comes with a dynamic effect, that produces motion, shifting, or transformation when the banknote is tilted or moved.

The devil lies in the details

Microprinting is a powerful anti-counterfeiting security feature that consists of incredibly tiny text (usually 0.15 to 0.3 mm high) printed onto banknotes. To the naked eye, the microprint appears as a solid, continuous thin line, but if seen under a magnifying glass, it reveals clear, legible words or numbers. Because of the feature’s microscopic size, counterfeiters using standard photocopiers or scanners cannot reproduce the fine details, and end up producing a text that usually translates into a blurred or solid line.

Central banks use either of positive microprinting (dark letters on a light background) or negative microprinting (light letters on a dark background). You will find some of the best use cases of microprinting in any prominent currency.

Next is ‘Intaglio Printing’, a security printing technique where designs get engraved into metal plates. Thick ink fills the recessed grooves, and immense pressure transfers it onto the paper, creating a thick, raised, and highly tactile texture. Here, Giesecke+Devrient has redefined the game through its ‘FIT System’, a combination of computerised engraving and laser technology that enables the realisation not only of very fine lines, but also translucent, multi-tonal structures that create new colours.

The element is embedded directly into the intaglio master by means of high-resolution laser engraving, and then embossed onto a reflective metal patch of the banknote paper. Three-dimensional structures are reproduced to an exceptional level of quality. The precise engineering guarantees that originals remain unique, whilst each reprint is identical to the base stock.

Another impact player is colour-shifting ink. Also known as Optically Variable Ink (OVI), the mechanism is a premium anti-counterfeiting measure that is used on modern banknotes. When you tilt the bill, the ink displays two distinctly different colours depending on your viewing angle, making it an incredibly reliable, naked-eye security feature.

The ink contains specialized metallic or magnetic flakes that bend and reflect light differently at various angles. Held flat, the ink on the note may appear green. Tilted, it shifts to blue, gold, or copper, depending on the specific currency and denomination.

Currency meets technology

Central banks are already thinking about the future. Digital and smart authentication of banknotes will be the next method to watch out for, as the procedure will be integrated into advanced cryptography, digital watermarks, machine-readable codes, and smartphone-based AI models to verify currency, deter counterfeiting, and bridge physical cash with digital financial ecosystems.

German technology company AUGENTIC and Orell Fussli Limited Security Printing have prepared a solution called ‘Smart Banknote CBDC’, that combines Orell Fussli’s highly secure banknotes with AUGENTIC’s ‘CBDC Platform’, including trustwise.io Distributed Ledger Technology.

Smart banknotes emerging from this ecosystem can be exchanged like traditional banknotes, apart from being converted into digital cash at any given time. This happens by using encrypted, anti-copied 2D barcodes for authentication purposes via smartphone. All processes are secured by DLT in combination with smart contracts.

Central banks and tech developers are also utilising consumer smartphones to verify currency. By using built-in cameras, infrared sensors, and advanced machine learning models, mobile apps can analyse banknote fingerprints, micro-printing, and edge transitions to confirm if a note is genuine with near-perfect accuracy.

Digital watermarks and machine-readable features, in the coming days, will allow banknotes to get printed with covert data, like specific magnetic signatures and invisible infrared patterns. Scanners, photocopiers, and ATMs will be programmed to detect this digital data, actively preventing unauthorised reproduction, or verifying deposits in real-time.

And then, there is ‘Chaotic Element Fingerprinting’, a state-of-the-art system that analyses the natural, random distribution of security fibres embedded in the paper pulp of a banknote. When scanned with UV light, this pattern serves as a unique cryptographic fingerprint linked to the note’s serial number.

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The survey, in which 90 sovereign wealth funds and 54 central banks participated, showed an increasing focus on diversification and investment portfolios that can “take a hit and still hold it together” amid trade tariffs, closed shipping channels, and wars in Ukraine and the Middle East.

Some 80% of the surveyed entities said energy ⁠security and energy transition infrastructure were the most credible investments for keeping their portfolios resilient, while infrastructure reached 9% of sovereign wealth fund assets in 2026.

“The race to build energy-hungry AI infrastructure added to the appeal,” the Invesco report noted.

In a world of inflation shocks, geopolitical fragmentation, and more concentrated markets, investors are rethinking old assumptions about diversification and redesigning portfolios to withstand a wider range of outcomes. Resilience is becoming a hard requirement, not a nice-to-have,” Invesco head of research Benjamin Jones said.

“The positive bond-equity correlation in recent years has also eroded reliance on bonds for diversification, with more focusing on liquidity and real assets,” he added further.

“Concerns about the dollar ‌were widespread ⁠and deepening, and 61% of central banks polled also said that U.S. debt levels negatively impact the dollar’s long-term position as a reserve asset, up from 20% in 2024,” Invesco noted.

While the Iran war has helped lift the dollar 3% in 2026, analysts say policy uncertainty from the Donald Trump administration, along with Uncle Sam’s high debt, would result in the currency weakening over the long term.

“The lack of a credible dollar ⁠alternative is likely to make any shift away from it incremental, but 29% of those in the Invesco survey said the dollar’s reserve-currency status will be weaker in five years, up from 12% in 2022,” the report said.

Financial institutions are also reportedly reviewing their reliance on US-based ⁠custodians, counterparties, and clearing infrastructure due to geopolitical tensions.

“One European central bank said it had already replaced its US custodian. A Latin American central bank said it was setting up new non-US custodial relationships to prepare ⁠for a worst-case scenario,” Invesco remarked.

Last but not least, one-third of the surveyed entities said they intended to boost gold holdings as part of the diversification trend.

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While the United States President Donald Trump, announced the signing of the preliminary agreement between his country and Iran, details of the pact haven’t emerged yet. However, that hasn’t stopped global markets from entering the feel-good mode.

Investor attention will now shift to the upcoming central bank meetings, with the Bank of England (BoE) and the US Federal Reserve giving their takes on whether the Iran war’s conclusion (subject to the stability of the interim peace deal) has come too late to ease inflation concerns of the British and American economies.

With the Bank of Japan already raising its interest rates to a 31-year high, the focus will be on the monetary policy approaches of the BoE and Fed.

The Australian dollar, on the other hand, was down 0.3% at USD 0.705, holding to its losses ‌as the ⁠Reserve Bank of Australia (RBA) left interest rates unchanged in a unanimous decision after three consecutive hikes even as inflation remains elevated.

Stating that the inflation rate (4.2%) was still too high, the RBA said it would do whatever was necessary to bring it down “including increasing the cash rate target further if required.”

Matt Simpson, a senior market analyst at StoneX, told Reuters that traders are not ‘buying’ the RBA’s mildly hawkish tone where the Australian dollar is concerned.

“Given soft employment and growth, the only reason it is hawkish at all is to not undo the work of the last three hikes,” Simpson said.

While the US-Iran interim peace agreement would extend the “ceasefire” already announced in April by another 60 days and reopen the strategically important Strait of Hormuz, the broader currency market’s reaction to the development was a constrained one. Now the comments of the central bank bosses will be keenly watched by the traders and investors.

The euro was at USD 1.1577, below the 10-day high of USD 1.1622 ⁠it touched on Monday. Sterling, on Tuesday, was last seen at USD 1.3392. The dollar index, which measures the US currency against six other units, was at 99.76.

Another question that the investors will seek a quick answer from is whether the global supply chain will get normalized, given the fact that the Hormuz closure since February 28 disrupted the energy trade to a large extent along with creating a price shock phenomenon.

As per the ING analysts, “the market reaction has been faster than realities on the ground, and it can be altered by the prospects of a deal.”

“A more durable repricing requires safe, predictable, and insured shipping through the Strait of Hormuz. And demand could likely be higher than usual as depleted reserves need to be replenished. Re-escalation risks are reduced, but not off the table,” they remarked in their market note.

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The survey, conducted between January and late March of 2026, saw about two-thirds of family offices covered by the Swiss bank predicting weakening confidence in the dollar as a reserve currency over the year. However, since then, the dollar started to outperform ⁠many of its global peers.

“The dollar’s depreciation in the year before the survey was conducted has prompted many family offices to review their portfolios, with almost half concluding they are overexposed to the US currency across asset classes,” said UBS strategist Maximilian Kunkel.

“While plans to reduce exposure to dollar-denominated assets reflect a wider reconsideration of US-centric portfolios, family offices plan to add emerging ‌market ⁠stocks and infrastructure while trimming real estate holdings,” UBS noted.

“For the first time, we are feeling that family offices want to build up in Asia Pacific and, to a certain degree, also in Western Europe. That mainly ⁠affects family offices outside the United States, but we are also seeing signs that a very limited part of the de-dollarization move is coming from U.S. family ⁠offices,” UBS executive Benjamin Cavalli said.

Among the surveyed family offices, geopolitical conflict has now emerged as the top concern by a wide margin, prompting the entities to combine asset allocation shifts with multishoring strategies. Under multishoring, family offices span their activities across jurisdictions.

While North America currently accounts for 53% of the family office portfolio allocations, as per the UBS survey, that dominance is steadily eroding, with investors now expressing growing interest in Asia-Pacific (including Greater China) and Western Europe as alternative destinations for capital deployment. In terms of asset class shifts, there has been a definitive tilt toward emerging market equities, gold, and infrastructure.

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The consortium, which set up an Amsterdam-based company called Qivalis in 2025, now has 37 financial institutions as members, including ING, BNP Paribas and BBVA, from 15 countries.

Euro-pegged cryptocurrency has been envisioned as a medium to counter American dominance in digital payments, apart from participating in a possible future system where assets such as bonds and real estate are traded as blockchain-based crypto tokens. The project has moved on despite the European Central Bank’s reservations about the potential benefits.

Talking more about the project, Qivalis CEO Jan-Oliver Sell said, “the euro is Europe’s currency, and on-chain financial infrastructure should carry it – built by European institutions and governed by European rules.”

Talking about the European Central Bank’s reservations about the project, in May 2026, the central financial institution’s president, Christine Lagarde, stated that the growth of private stablecoins requires a stricter separation of the functions of money and payment instruments, as well as increased attention to risks for the financial system.

The 25 new members include Dutch lenders ABN Amro and Rabobank, Spain’s Sabadell and Bankinter, Bank of ‌Ireland, ⁠Sweden’s Handelsbanken and Finland’s Nordea, among others.

The formation of the consortium also coincides with the broader crypto industry’s trend of competing with mainstream financial institutions, putting traditional lenders under pressure to find uses for blockchain technology within their own businesses.

Stablecoins – ⁠a type of cryptocurrency pegged to a fiat currency – are mostly used in crypto trading and have surged in size in recent years. The market is dominated by El Salvador-based Tether and ⁠US-based Circle, which say they have around USD 190 billion and USD 77 billion of their dollar-pegged tokens in circulation, respectively,” reported Reuters.

While a good chunk of the global stablecoin market has been witnessing a sort of a dollar hegemony, an ECB working paper recently projected that that dollar-backed stablecoins would end up creating additional demand for US government debt, apart from enhancing the global role of the US national currency through digital settlements.

While the paper linked the growth of such tokens to the strengthening of the “dollar-centric” architecture of the global financial system, the euro-pegged cryptocurrency, albeit smaller in scale, wants to challenge the trend.

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The eight-year bonds received subscription orders exceeding USD 3.9 billion, reducing the annual yield to 7.6% from 8% due to strong demand.

While the offering was led by HSBC Bank, Deutsche Bank, and Citibank, the incident marked the first dollar-denominated social bond issuance for the international market since the beginning of the Middle East conflict. Proceeds from the issuance will be used to finance and refinance Egypt’s social projects.

The issuance is part of the President Abdel Fattah El-Sisi-led government’s effort to diversify financing tools, lower borrowing costs, expand the investor base, extend debt maturities, manage debt more efficiently, and reduce the debt-to-GDP ratio.

“In a call with Chinese Foreign Minister Wang Yi last March, Minister of Foreign Affairs Badr Abdelatty signalled Egypt’s interest in doubling the value of its currency swap agreement with China, addressing the government’s plans to increase issuance of USD 500 million in Chinese bonds. In November 2025, the Ministry of Finance launched its first sovereign sukuk issuance in the local market, valued at EGP 3 billion, through the primary dealer system, with a three-year maturity period,” reported Al-Ahram.

The issuance also comes at a time when Egypt faces economic pressures linked to rising global energy prices and the Iran war’s impact on emerging markets. Talking about Egypt, the North African country relies on imports for a large share of its fuel and food needs. However, despite the global economy facing the aftershocks of the Middle East conflict and the Strait of Hormuz disruptions, recent market indicators indicated a relative improvement in investor confidence toward Egypt’s economy, supported by a rise in foreign currency reserves to over USD 53 billion, along with good news like slowing inflation and improvement in other indicators during Q1 2026.

The Egyptian pound has also been relatively stable after losses at the start of the war, while the main index of the Egyptian Exchange has continued to trade at high levels.

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While spot gold rose 1.1% to USD 4,559.46 per ounce, hitting its highest since March 20, US gold futures for April delivery gained 0.7% to USD 4,588. However, it was still not enough to offset the bullion’s more than 13% decline in March, putting it on track for its steepest ⁠fall since October 2008.

“You could probably describe the recovery we’re seeing in gold as something of a dead cat bounce, which is to say not much of a bounce at all. If indeed (US President) Donald ⁠Trump can exit himself from what could become a very protracted event, then we could see oil and the dollar coming off, which would be gold positive. But we’re ‌not in that position yet,” independent ‌analyst Ross Norman told Reuters.

The dollar, on the other hand, headed for its biggest monthly gain since July 2025, making greenback-priced bullion more expensive. The month-long Middle East war has already sent oil prices surging, raising the risk of global recession, as the global energy trade through the vital Strait of Hormuz remains disrupted, with no conflict resolution on the horizon so far.

Discussing gold, the go-to hedge against inflation and geopolitical risks, it has fallen more than 14% since the war began on February 28, as rising expectations of a hawkish monetary policy outlook weighed on the non-yielding metal.

According to CME Group’s FedWatch Tool, money market participants ‌have completely priced out any chance of a Federal Reserve interest rate cut in 2026 from about two cuts expected before the conflict.

Goldman Sachs, however, expects gold prices to reach USD 5,400 per troy ounce by the end of 2026, as the financial giant still sees two US interest-rate cuts this year.

Meanwhile, spot silver rose 4.2% to USD 72.90 per ounce, while spot platinum ‌gained 0.9% to USD 1,916.70, and palladium went up 2.8% at USD 1,445.71.

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Fitch assesses liquidity using Bloomberg’s Liquidity Assessment (LQA) scores, which indicate security-level liquidity. The ratio can range from one to 100, with 100 signifying the highest liquidity. Generally, a score of 100 is assigned to securities with the lowest liquidation costs within an asset class, while securities with the highest costs get a score of one.

According to Fitch, LQA is a data-driven model that produces a daily security-specific liquidity surface that captures the relationship between volume, cost, and time.

“The LQA decline for investment-grade sukuk has been less severe than for speculative-grade sukuk on average,” the agency stated further.

“While LQA scores have declined in most GCC debt capital markets since the Iran war’s beginning, as well as for sukuk issuers in Turkey, Egypt and Indonesia. On the other hand, many rated Malaysian, Omani, and supranational sukuk have shown resilience in their LQA scores,” Fitch noted.

“Sukuk in the ‘BB’ and ‘B’ categories have the lowest LQA scores among all Fitch-rated sukuk globally on average, with the steepest liquidity fall compared to other rating categories since the war began. Sukuk in the ‘F1sf’, ‘AAA’, ‘BBB’, ‘AA’, and ‘A’ categories held the highest liquidity of all rated sukuk, but also faced declines, except ‘F1sf’,” it stated.

Sector-wise, corporates, infrastructure and project-finance sukuk had the lowest LQA scores among all rated sukuk globally, with the steepest liquidity falls. Asset-backed, supranational and sovereign sukuk, in contrast, maintained the highest liquidity levels, except asset-backed sukuk, whose scores increased.

“Fitch also analysed liquidity for 52 comparable sukuk and bonds from the same issuers. Liquidity was broadly similar in 50% of cases, sukuk were less liquid than bonds in 31%, and more liquid in 19%. GCC US dollar sukuk and GCC US dollar bonds have displayed broadly similar liquidity trends, with both declining since the war began. The average LQA score for GCC US dollar sukuk fell to 45 on 23 March from 56 at the end of 2025. The average score for GCC US dollar bonds dropped to 48 from 53 in the same timeframe,” the ratings agency remarked.

“About 64% of Fitch-rated sukuk had an LQA score above 50 on 23rd March, down from 82% in January 2025 (excluding local ratings and sukuk without an LQA score). Investment-grade sukuk are generally more liquid, with an average score of 65 as of March 23 (January 2026: 73), compared to 33 for speculative-grade sukuk (January 2026: 48). Historically, GCC DCMs have rebounded fairly quickly when tensions eased following previous Middle East geopolitical episodes, but the impact this time will depend on the scale and duration of the war,” it concluded.

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