{"id":255439,"date":"2025-11-07T16:20:05","date_gmt":"2025-11-07T14:20:05","guid":{"rendered":"https:\/\/sada.ly\/en\/?p=255439"},"modified":"2025-11-07T16:20:05","modified_gmt":"2025-11-07T14:20:05","slug":"khaled-al-zantouti-the-central-bank-and-sustainable-development-caught-between-division-regionalism-and-the-prohibition-of-interest","status":"publish","type":"post","link":"https:\/\/sada.ly\/en\/khaled-al-zantouti-the-central-bank-and-sustainable-development-caught-between-division-regionalism-and-the-prohibition-of-interest\/","title":{"rendered":"Khaled Al-Zantouti: “The Central Bank and Sustainable Development \u2014 Caught Between Division, Regionalism, and the Prohibition of Interest!!”"},"content":{"rendered":"\n

The Financial Analyst Khaled Al-Zantouti wrote:<\/p>\n\n\n\n

No one can deny the crucial role of central banks in promoting sustainable development within any economy. They drive the economic process through monetary stability and effective monetary policies. Unlike commercial banks, which seek positive returns through lending policies and profit-making between deposit costs and loan revenues, central banks aim to create financial stability that encourages investment through monetary policies that take into account all macroeconomic and microeconomic variables and their effects on credit and economic growth, as well as maintaining and growing the state’s reserves.<\/p>\n\n\n\n

From here, I ask \u2014 innocently \u2014 has our Central Bank succeeded throughout the past decade in supporting sustainable development in Libya through effective monetary policies? The answer, perhaps, is no, no, no<\/em>. But why not!?<\/p>\n\n\n\n

The truth we must address with honesty and objectivity is that the Central Bank has, over the past years, been entangled in a closed loop of division, regionalism, and corruption. Even when some tried to reform (regardless of the previous administration, which I consider the missing link between those loops), it failed to be independent in its decision-making \u2014 dominated by individualism and the absence of an effective board of directors. This left it stumbling between terrifying cycles of division, corruption, and a struggle over the dollar. Unfortunately, to preserve positions, alliances were formed with one side after another, until interests clashed \u2014 and the consequences followed.<\/p>\n\n\n\n

Another major issue that shackled and paralyzed all the Central Bank\u2019s functions is the prohibition of interest and the absence of an alternative. The problem is that all monetary policies, without exception, rely on a key variable \u2014 the interest rate. When this tool is completely disabled, and no substitute exists, the Central Bank becomes unable to adopt any monetary policy. Through the interest rate (or its alternative, if any), inflation is controlled, purchasing power is managed, investment opportunities are opened, productive employment is stimulated, and economic development is enhanced, among other things.<\/p>\n\n\n\n

Neither the Central Bank nor anyone else has managed to develop a viable alternative to the interest rate, except for some so-called \u201cIslamic banks\u201d offering limited products that have not contributed at all to increasing developmental investment \u2014 rather, they exploited ordinary citizens with costs surpassing all prevailing \u201cinterest\u201d rates in comparable markets!<\/p>\n\n\n\n

Here, I am not discussing the usurious<\/em> nature of interest, as this is a subject of disagreement among scholars and Islamic academic institutions. However, I must note that usury<\/em> (in its linguistic and terminological sense, usury<\/em>) is prohibited in all cultures and religions \u2014 from Hammurabi\u2019s Code to current U.S. law \u2014 and, most importantly, by our Islamic faith, which absolutely forbids usury. That is beyond dispute. The real discussion should center on whether interest<\/em> and its economic and financial components fall under the definition of riba<\/em>. This requires a religious and economic discussion governed by the principles of the Holy Qur\u2019an and the essence of our timeless faith, led by our respected scholars and specialized academic institutions.<\/p>\n\n\n\n

The loss of this policy tool and the absence of alternatives have forced our Central Bank to focus on money supply, monetary mass, and printing money to address short-term liquidity shortages imposed by the ongoing division and conflict. This has burdened citizens, disrupted livelihoods, led to the withdrawal and reissuance of currency amid accusations of forgery, and created a liquidity crisis affecting everyone.<\/p>\n\n\n\n

I do not believe that, under such circumstances, even the U.S. Federal Reserve\u2019s Board of Governors and Chairman Jerome Powell could operate effectively \u2014 so imagine our own situation. May God help them.<\/p>\n\n\n\n

The Central Bank\u2019s management history often shows tendencies toward temporary, patchwork solutions to deal with sudden variables imposed by certain interest groups \u2014 such as printing currency, spending reserves, and withdrawing or replacing some issues. Some of these short-term solutions have created severe problems directly and indirectly affecting citizens \u2014 like liquidity shortages and public debt.<\/p>\n\n\n\n

Even when the new administration<\/em> of the Central Bank attempted to address structural problems such as unifying the budget and controlling expenditure, unfortunately, it found no receptive ears among those with legislative and executive power \u2014 everyone played to their own tune.<\/p>\n\n\n\n

Even the recent proposal to establish a holding company funded by the Central Bank\u2019s reserves (as reported by media) \u2014 with due respect to its proponents \u2014 also carries risks. It could violate international standards governing the role of central banks, which prohibit them from forming holding or other companies, or acquiring significant shares. Moreover, it contradicts the global rules for investing state reserves \u2014 which emphasize low-risk, sovereign, high-quality, investment-grade assets. Most international standards prohibit central banks from owning commercial banks, based on the principle of maintaining full independence. Unfortunately, our Central Bank clearly violates this through its ownership of major and minor shares in Libya\u2019s largest commercial banks \u2014 which completely negates its supervisory independence, since one cannot both own<\/em> and regulate<\/em> simultaneously.<\/p>\n\n\n\n

In light of the above, I hope and wish that the Central Bank pays attention to the following recommendations:<\/p>\n\n\n\n