Monetary Policy in the Presence of Islamic Banking

March 18, 2016

Preview Citation

Format: Chicago

Mariam El Hamiani Khatat. Monetary Policy in the Presence of Islamic Banking, (USA: International Monetary Fund, 2016) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper discusses key issues related to the conduct of monetary policy in countries that have Islamic banks. It describes the macrofinancial background and monetary policy frameworks where Islamic banks typically operate, and discusses the monetary transmission mechanism in economies where Islamic and conventional banking coexist. Most economies with Islamic banks also have conventional banks and this calls for a comprehensive approach to monetary policy. At the same time, a dual approach to monetary policy should be considered whenever the Islamic segment of the financial system is not as developed as the conventional one. The paper tries to shed light on potential spillovers between conventional and Islamic financial systems, and proposes specific recommendations on the design of Islamic monetary policy operations and for facilitating monetary transmission through the Islamic financial system.

Subject: Asset and liability management, Credit, Financial markets, Financial services, Interbank markets, Islamic banking, Islamic finance, Liquidity, Liquidity management, Monetary policy, Monetary policy frameworks

Keywords: Bank, Bank lending channel, Banks competition, Dual financial systems, Exchange rate, Financial system, Funding cost, Global, Government securities market, Interbank markets, Islamic banking, Islamic banks, Lender of last resort, Liquidity, Liquidity management, Market, Monetary operations, Monetary policy, Monetary policy framework, Monetary policy frameworks, Monetary policy transmission, Monetary transmission mechanism, Sukuk markets, Transmission mechanism, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/072
Stock No:

WPIEA2016072
ISBN:

9781475523942
ISSN:

1018-5941

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