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Volume :18 Issue : 54 2003      Add To Cart                                                                    Download

Islamic Monetary and Fiscal Policies and its Role in Overcoming Inflation

Auther : By Dr. Ahmad Subhi Ahmad Al-Eyadi

 

Islamic Monetary and Fiscal Policies and its Role in Overcoming Inflation

By Dr. Ahmad Subhi Ahmad Al-Eyadi

Assistant professor of Islamic Economy in the department

of Islamic Studies - University of Educational Sciences

(ONORWA) - Jordan

The fiscal and monetary policies are used in restricting the inflation.

These policies are the real motives to economy and over coming. inflation which brings about bad reflections on society. Therefore, the concepts and the aims of the Islamic monetary policy besides the contemporary methods and the concept of inflation should be studied.

The usage of the Islamic contracts and dealings overcome inflation and achieve the goals of the fiscal and monetary policies, since contracts leads to intermixing the elements of production, and when money is leased and it returns to its nature and usury fall down. Thus a balance usually happens between money and goods supply.

We can conclode the research in the following points:

The monetary and the fiscal policies have the same objectives and goals, that concentrate on controlling the amount of circulated money and its stability.We can put solutions to inflation and its symptoms and effects by using the tools of the Islamic monetary and fiscal policies in more effective way.

Usury, in fact, is deviating money from its original function as a means (criterion) of exchanging goods to be an article sold, bought and let. Thus usurg spoils money and contracts, and prevents the intermixture of the elements of production effectively.

Zakat (alms) is an effective tool in struggling inflation through gattering and distributing it. It is also an effective tool in fighting treasuring up Zakat (alms); however, it helps in managing the elements of production effectively through intermixing it with the Islamic contracts which leads to a balance between the supply of money and goods supply.

Dealing with usury in trading banks at present, leads to a kind of money expansion `money creating. In Fact, this leads to increasing the supply of money which results in inflation and it is known that issuing money is the responsibility of the state.

The Islamic investment contracts aims to justice of constractions, also, it bond them to intermix the capital with other elements of production. This, there will not be any profit except for the real profits from goods and services, This will prevent inflation and results in balance economy.

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