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.
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.