The Development of an Islamic Money Market.Pdf

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The developrnent an of Islamic money market
Nasiruddin Ahme4 gives his views on the development of the Islamic Bank. The establishment of an Islamic money market will require the support of the central Bank. It is essential to develop specific financial instruments to utilize and mobilize funds thus enabling the Islamic Banks to meet the essentialneeds of the Shariah. , u a d i t i o n a l i n t c r e s t - b a s e dy s s T:.:-. ihe moncy market becomesa | I : : = . ' n s b l . w h i c h f i n a n c i a li n s t i t u r : r : i r -.ir n a d j u s t t h e i r b a l a n c es h e e t ; - , : : , : , : ; r c e o s i t i o ni n t h c s em a r k e t s . p i: --r - u i ^l L ( l ) r r -^^:!:lns, which exists -^^1^ PU>rtr\ .'i : r.' iinancialintermediaryassets or Iiabilitiescan be negotiatedis a nccessarv ingredient. Additionally, to the extent that monev markets help lower the income elasticity of demand for cash and help investment projects to be financed, their importance in the Islamic financialsystemcannotbe

o v e r l d o k e d . E v e n i n t h i s s y s t e m , b a n k s . I n t h i s c a s e ,t h e d e v e l o p m e n t money markets will enable financial of an inter-bank funds is a distinct units to be safelyilliquid, provided possibility. It may be possible for t h e y h a v e a s s e t s w h i c h a r e e l i g i b l e f os o m e b a n k s t o r e f i n a n c e a c e r t a i n r t h i s m a r k e t . I n t h i s s y s t c m ,t o o , t h e p o s i t i o n t h a t t h e y h a v e t a k e n b y basicraw tnaterialfor the morley rnar- agreeing to share prospective profits ket is the existence pools of excess in thesepositionswith other banks in of illiquidity. the inter-bankfunds market. One principle activity of money F i n a l l y ,s i n c em u c h o f t h e i n v e s t markets in this system is expectedto ment portfolios of banks will be in b e a r r a n g e m e n t sb y w h i c h t h e s u r - e q u i t y p o s i t i o n o f v a r i o u s t e r m s a n d p l t r sf u n d s o f o n e f i n a n c i a l n s t i t u t i o n m a t u r i t i e s , i t i s a l s o p o s s i b l e t h a t a i s u b s e to f t h e i r a s s e tp o i t f o l i o s c o m posed of equity sharescan be offered in the money market in exchange for liquidity. Here i.t;te,,.dt:.iDifli:lAi,....,illr.ll , t o o , e f f e c t i v e a n d v i a b l e 1,;',',",:,;,1i1ifi7,ft'2'si;';':,;,,co.i'ttli money markets in the Islamic system will require activesupport and partic";"',"'i'rriiilt'l'lliiliiii:iio"t't','li,"t,a$.,tn..a.....:..'t r a l b a n k , p a r t i c u...
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