Debt-sale securities as a monetary policy instrument in the Islamic banking system of Iran

Hossein Meisamy

doi:10.33102/jmifr.v18i1.325

Authors

Hossein Meisamy The Monetary and Banking Research Institute (MBRI), Tehran, Iran

DOI:

https://doi.org/10.33102/jmifr.v18i1.325

Keywords:

Iran, debt-sale securities, fiqh, riba, Islamic Shariah

Abstract

This paper discusses the legitimacy of securitizing the central bank receivables from the government and banking system in the Iranian financial market and making use of this instrument to conduct monetary policy. Ijtihad or independent jurisprudential reasoning based on Imamiah Fiqh (prevailing in the Iranian Islamic banking system), is used as paper methodology. The results show that considering the jurisprudential ‘ownership unity’ between the central bank, the government, and governmental banks in the Iranian banking system, securitizing the central bank receivables from the government or the governmental banks is not legitimate and not Shariah-compliant. Nevertheless, it is possible to issue debt-sale securities based on the debts of private banks to the central bank. Therefore, issuing debt-sale securities based on central bank receivables from the private banks can be considered a suitable instrument for conducting Shariah-compliant monetary policy in the Islamic banking system of Iran. This paper discusses for the first time the idea of issuing debt-sale securities as a monetary policy instrument in the Iranian financial system. Besides, the analysis is based on the Imamiah School of Fiqh, which is also new.

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Author Biography

Hossein Meisamy, The Monetary and Banking Research Institute (MBRI), Tehran, Iran

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