Abstract
The primary aim of this paper is to elucidate the general concept of monetary policy under Islamic Economics. Not only does the stability of but also the growth of the economy in a country strongly depends upon monetary policy implemented. Such the phenomenon also prevails in Islamic Economics in which the term is also ruled by the Holy Quran and the Hadith of the Prophet. Moreover, the Prophet issued some regulations regarding monetary, such as to adopt Dinars and as the Islamic currencies. It is noted that, however, the thing distinguishing between Islamic Economics and other economic systems the variable of interest or usury, where either the Holy Quran or the Hadith clearly states that it is banned. Due to using interest as the yardstick, the conventional monetary instruments such as Open Market Operation, Discount Rate and the likes are not considered as the monetary instruments under Islamic Economics. Therefore, Instead of interest, Islamic Economics adopts Profit Loss Sharing (PLS) system, regarded as the important part of monetary policy. Moreover, Islamic Economics has also its specific monetary standard and instruments, which are far from interest or variables, such as certificates and others.
Highlights
Monetary and inancial crises happening persistently throughout the world, which starts from the beginning of the twentieth century to the present time, could indicate that implemented-monetary policies cannot secure an economic stability incessantly
Malaysia and Indonesia, Islamic banks have operated in the both countries for some decades, monetary policy in the both are based upon interest rates
Monetary policy is an economic policy related to the money supply in the economy, with the aim of achieving economic stability and growth
Summary
Monetary and inancial crises happening persistently throughout the world, which starts from the beginning of the twentieth century to the present time, could indicate that implemented-monetary policies cannot secure an economic stability incessantly. The sources do not elucidate the issues in detail; they just provide the general and root principles instead This is a great responsibility for Muslim scholars to raise monetary policies and theories that have to be in conformity with the Qur’an or the Hadith. Either theories or policies concerned have to it into the framework of the overall Islamic economic system and must be applicable and suitable with the current situation of the economy They have to be in place in the face of the persistently world economic problems, which becomes as the long-term solution . One of the monetary policies undertaken by the Prophet in the early Islam was that he consented to dealing with Dinars and Dirhams as the medium of exchange for the Muslim society Such the policy was regarded as the fundamentals for economic and inancial activities during the time.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
