An attempt to develop sharīah compliant liquidity management instruments for the financier of last resort : with reference to Qatar development plan

Abstract EN

In 2011, Islamic banking reached around 24 % of the banking sector in Qatar, yet Qatar Central Bank (QCB) has not developed a Sharīah compliant financier of last resort.

This paper investigates to which extent the available liquidity management instruments for Islamic banks are Sharīah compliant.

Each instrument is analyzed in the context of Sharīah standards.

Findings of this analysis suggest that the available instruments some Sharīah issues, such as ribā, tawarruq, and ijārah īnah.

We propose three alternative Sharīah compliant liquidity management instruments for the financier of last resort, as well as the interbank market.

The first instrument is short-term muḍārabah deposits.

The second, is to sell Islamic banks’ leased assets to the central bank.

Whereas, the third is open market operations utilizing tradable ṣukūk.