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Involving Islamic banks in central bank open market operations
Author(s) -
ElGamal Mahmoud A.
Publication year - 1999
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.4270410412
Subject(s) - islam , government (linguistics) , variety (cybernetics) , open market operation , islamic banking , business , accounting , economics , monetary policy , monetary economics , computer science , philosophy , linguistics , theology , artificial intelligence
A variety of existing and proposed alternative government papers are acceptable to some Islamic Banks and not to others, due to differences of opinion among Islamic Jurists on the admissibility of various contracts. This overview article discusses: (i) the relevant aspects of Islamic law which govern the sale and resale of government papers; and (ii) various government papers that are accepted in practice by some Islamic banks in Islamic countries, and their effectiveness in carrying out open market operations (OMOs). The policy prescription arising from the paper is the need for Central Banks to engage in reverse financial engineering , to issue government papers which target banks would accept. © 1999 John Wiley & Sons, Inc.