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The Design of Instruments for Government Finance in an Islamic Economy

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  • International Monetary Fund

Abstract

This paper presents perhaps the most viable approach for the design of an instrument of government finance (and monetary management) in an Islamic economy where conventional transactions based on an ex-ante promise of a risk-free rate of return are forbidden. Resources to finance government infrastructural and development projects can be mobilized by issuing a national participation paper and this instrument can also serve as an instrument of monetary management. The paper discusses various conceptional issues underpinning the introduction of such an instrument and methods of calculating a corresponding rate of return. In principle, this approach has been accepted by the Islamic Republic of Iran.

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  • International Monetary Fund, 1998. "The Design of Instruments for Government Finance in an Islamic Economy," IMF Working Papers 98/54, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:98/54
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    Cited by:

    1. Giorgio Gomel & Angelo Cicogna & Domenico De Falco & Marco Valerio Della Penna & Lorenzo Di Bona De Sarzana & Angela Di Maria & Patrizia Di Natale & Alessandra Freni & Sergio Masciantonio & Giacomo Od, 2010. "Islamic finance and conventional financial systems. Market trends, supervisory perspectives and implications for central banking activity," Questioni di Economia e Finanza (Occasional Papers) 73, Bank of Italy, Economic Research and International Relations Area.
    2. Shaikh, Salman Ahmed, 2010. "Sources of Public Finance in an Islamic Economy," MPRA Paper 22998, University Library of Munich, Germany.
    3. Juan Sole, 2007. "Introducing Islamic Banks into Conventional Banking Systems," IMF Working Papers 07/175, International Monetary Fund.
    4. Shaikh, Salman Ahmed, 2010. "Proposal for a New Economic Framework Based On Islamic Principles," MPRA Paper 23000, University Library of Munich, Germany.

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