Kuwait-University-Journal-of-Law-header
Search
Journal of Law

Previous Issues

Advance Search
Year : From To Vol
Issue Discipline:
Author

Volume :21 Issue : 3 1993      Add To Cart                                                                    Download

Suggested Modifications on Conventional Central Banking for An Islamic system in A transitory Stage

Auther : Abdullah ghazi AL-Azemi

Although the objectives and the functions of Islamic central banks are similar to those of conventional central banks, they in many respects differ from conventional central banks in the way those functions are performed because of the requirements of Islamic law. Islamic central banks are similar to conventional central banks in that they are responsible for issuing currency and by acting as a banker to the government and commercial banks, Islamic central bank is the primary institution responsible for implementing.

It has been suggested that the available instruments of monetary policy under the Islamic banking system can modified in varying degrees depending on whether or not interest rates are involved. The operation of the “discount mechanism”, for example, will have to be modified. In lieu of short-term fixed rate advances to banks. Islamic central bank can perform its function as a lender of last resort by participating in short-term venture with commercial banks and instead of changing the discount rate, the central bank can control the profit ratio on these ventures. Likewise. Open market operations that are conventionally based on debt instruments will have to be conducted in equity markets, Instruments such as moral suasion and loan ceilings remain the same. Some instruments need partial modifications in order to make them, consistent with the Shari’ah. These include liquidity ratio, Finance priorities, orders and advice’s, and credit regulations. Other instruments, such as discount rate and open market operations are in need of changes that make them in compliance with Islamic law.

This paper reviews in detail the service functions, either actual or suggested, of the Islamic central banks, and how they differ from those of ferried by their counterparts, the conventional central banks, and examines the general, selective, and direct instruments of monetary control used by the Islamic central banks, Any modifications, if needed, are outlined in order for these instruments to comply with Shari’ah.

Journal of Law
Journal of Law

You are Visitor No.

79837

Journal of Law
Journal of Law
Tell your friendsJournal of Law
Journal of Law

Last Updated

Nov 28, 2019

Journal of Law
Journal of Law
Journal of Law

Please enter your email Here to receive our news

Journal of Law