Financial analyst Khaled Al-Zantouti wrote in an article:<\/p>\n\n\n\n
Most of us are probably fully aware of the role monetary policy plays in stimulating growth, stabilising prices, addressing the effects of inflation, and stabilising local currencies’ exchange rates against other international currencies.<\/p>\n\n\n\n
These are, broadly speaking, the objectives of monetary policy pursued by any central bank. Whether the policy is contractionary or expansionary, it requires effective tools capable of achieving these objectives in accordance with market conditions. These include quantitative instruments related to the discount rate, money supply, open market operations, and the required reserve ratio.<\/p>\n\n\n\n
In Libya’s case, open market operations are limited, if not virtually non-existent. They are confined to certain unrestricted Mudaraba deposit certificates, for which there is no active financial market where they can be traded.<\/p>\n\n\n\n
The easiest option for our Central Bank has always been to set the required reserve ratio. However, I believe its impact on liquidity and money supply is limited because a considerable amount of liquidity remains outside the banking system for various reasons.<\/p>\n\n\n\n
This leaves only what is known as the discount rate, rediscount rate, or interest rate.<\/p>\n\n\n\n
Generally speaking, the discount rate is a rather understated term for its broader meaning: the interest rate.<\/p>\n\n\n\n
And this is precisely the crux of the matter in any economic policy. Here, with all due respect to differing opinions, I firmly maintain that unless we make use of this discount rate, there can be no effective monetary policy.<\/p>\n\n\n\n
We can never contradict the teachings of our noble religion. However, we urgently need to discuss this matter with open minds, bearing in mind that Islam is a religion suitable for all times.<\/p>\n\n\n\n
There is no doubt that we categorically reject riba (usury), as it is explicitly prohibited in the Holy Quran, leaving no room for debate. It is worth noting that most religious traditions and secular legal systems also prohibit usury, from the Code of Hammurabi to American law, which prohibits usury. As an economic term, usury<\/em> refers to interest rates that far exceed fair or reasonable levels, often by several multiples.<\/p>\n\n\n\n Therefore, there can be no debate or leniency when it comes to the prohibition of usury.<\/p>\n\n\n\n Our problem lies in defining what constitutes riba.<\/p>\n\n\n\n Many Islamic sources, including Al-Azhar and the Islamic Research Academy, have addressed this dilemma. Yet we continue to hesitate to engage with this issue.<\/p>\n\n\n\n I would therefore like to call upon our respected religious scholars, as well as our colleagues in finance and economics, to examine this subject, given that it is one of the most important instruments of monetary and credit policy.<\/p>\n\n\n\n Allow me to suggest that, from an economic perspective, the interest rate is the sum of the inflation rate and the risk premium:<\/p>\n\n\n\n \\[ IR = IP + RP \\]<\/p>\n\n\n\n God Almighty says in His decisive verses:<\/p>\n\n\n\n \u201c…But if you repent, you may have your principal\u2014neither inflicting nor suffering harm.\u201d<\/p>\n\n\n\n I invite you to reflect on this from both religious and economic perspectives. Let the Holy Quran be our guiding light, Islam our law, and calm, open discussion our means of addressing the demands and challenges of this age.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Financial analyst Khaled Al-Zantouti wrote in an article: Most of us are probably fully aware of the role monetary policy plays in stimulating growth, stabilising prices, addressing the effects of inflation, and stabilising local currencies’ exchange rates against other international currencies. These are, broadly speaking, the objectives of monetary policy pursued by any central bank. […]<\/p>\n","protected":false},"author":13,"featured_media":258798,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"iawp_total_views":1,"_asgm_disable_schema":false,"_asgm_disable_faq":false,"_asgm_disable_howto":false,"_asgm_disable_llms":false,"_asgm_llms_description":"","footnotes":""},"categories":[683],"tags":[613],"class_list":["post-258797","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economic-articles","tag-libya"],"acf":[],"yoast_head":"\n