For Islamic financial institutions, a financial engineering challenge is to introduce new Shariah-compatible products that enhance liquidity, risk management, and portfolio diversification. Generally, attempts to apply financial engineering techniques to Islamic banking will require committing a great deal of resources to understanding the risk-return characteristics of each building block of the system and offering new products with different risk-return profiles that meet the demand of investors, financial intermediaries, and entrepreneurs for liquidity and safety. Securitization is a prime candidate for financial engineering. New financial innovations are also needed to satisfy the demand for instruments at both ends of the maturity structure: extremely short-term deposits and long-term investments. Money markets that are Shariah compatible do not exist at present, and there is no equivalent of an Islamic interbank market where banks could place, say, overnight funds or could borrow to satisfy a need for temporary liquidity. Although securitization of a pool of lease portfolios could help to develop the interbank market, the volume of transactions offered by securitization may not be sufficient to meet the demand (Iqbal 1999).