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Islamic Finance 7d
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Islamic Finance 7d Presentation Transcript

  • 1. Malaysia: Islamic Money Market Instruments Nuradli Ridzwan Shah Bin Mohd Dali University Sains Islam Malaysia Prof. Dr. Abdul Ghaffar Ismail Universiti Kebangsaan Malaysia
  • 2. Presentation Outline
    • Introduction
    • Mudharabah Interbank Investment
    • Islamic Interbank Cheque Clearing System
    • Sale And Buy Back Agreement
    • Accepted Bills – Islamic (AB-i) Government Investment Issues (GII)
    • Islamic Treasury Bills
    • Cagamas Mudharabah Bond
    • Islamic Negotiable Certificates Of Deposit (INCO)
    • Islamic Private Debt Securities (IPDS)
    • Al Rahnu Agreement-i (RA-i)
    • Conclusion
  • 3. Introduction
    • The money market - medium and short-term instruments
    • An increase in the number of money market instruments in the Islamic money market increased the Islamic bank’s exposure to a wide range of risks such as credit, operational, profit and liquidity risks.
    • Attempt to explain the process of Islamic money market instruments and the possible Islamic contracts used in the sale and purchase of securities in the primary and secondary interbank money markets.
    • The Islamic money market was established to avoid interest, uncertainty (gharar) and gambling (maisir) as promulgated by the Shariah divine laws.
  • 4. Mudharabah Interbank Investment
  • 5. Islamic Interbank Cheque Clearing System
  • 6. Sale and Buy Back Ageement (Repo)
  • 7. ACCEPTED BILLS – ISLAMIC (AB-I)
  • 8. ACCEPTED BILLS – ISLAMIC (AB-I)
  • 9. Government Investment Issues
  • 10. Islamic Treasury Bills
  • 11. Cagamas Mudharabah Bond
  • 12. Conclusion
    • Competition in the global market - Islamic banks to participate in the money market
    • The timing of the Islamic Money Market establishment is appropriate
    • The Islamic money market’s products have grown 1 to more than 10 instruments.
    • The rapid growth - is getting recognition based on its importance in ensuring the soundness of the overall risk management of Islamic banks.
    • However, the growth of the products should not be abused especially when formulating the instruments with the sales of debt (bay ad dayn) concept. Bay ad dayn should not be the priority concept and must be ranked as the last resort after mudharabah, musyarakah and murabahah.
    • This is to encourage the usage of profit sharing in the Islamic financial system as promoted by Islamic economists.
    • Therefore, practitioners should not be over zealous in developing Islamic money market instruments if it seems like its replicating conventional instruments.