There is a vast literature on regulatory, monetary and institutional aspects of traditional banking system. This is not true for the interest-free Islamic banking framework. In this paper, the functions and tools of central banking in an Islamic framework are evaluated, and suggestions for adapting and revising the currently used tools of central banking for the Islamic central banking are made...

NTEREST IN BANKING MATTERS surged in the 1980s, when the U.S. banking system experienced considerable difficulties after several decades of stability. During the decade, the number of bank failures increased sharply, and banks in general experienced increasing problem loans and dwindling capital. Most banks recovered their financial strength in the early 1990s thanks to improved economic condit...

in recent years, the banking industry has made significant changes in technology and communications. the expansion of electronic communications and a large number of people around the world access to the internet, appropriate to establish trade and economic exchanges provided but high costs, lack of flexibility and agility in existing systems because of the large volume of information, confiden...

The present paper is an attempt to: 1- Demonstrate how money is created (by the nature of the system), and to estimate the inflation resulting from monetary factors in both usurious and non-usurious systems. Operational aspects of Islamic and non-Islamic banking systems are compared. 2- Introduce a corrective term to be added to the multiplier of the supply of money, in order to prevent the und...