Purpose:This paper aims to examine monetary instruments in Islamic central banking framework. As a conclusion, to revive Islamic monetary policy, we should provide some public equity-based instrument as a necessaryreplacement for conventional bonds and treasury bills to activate non-usury open market operations. Design:We define a type of new negotiable bond as: “Rastin Swap Bonds (RSBs)”, which is basedon swapping money between two persons for two different periods. Findings:RSB is a financial paper that observes the right for the lender to borrow an equal amount to his lending from the borrower. Four types of RSBs in domesticmoney and foreign currency are defined, andtheir Sharia allowances and monetary, fiscal, and financial effects are evaluated.Research limitations:This bond isa novel design, andit is required to be more elaboratedfor further practical development and adjustment.
Source: International Journal of Islamic Banking and Finance Research
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