Introduction

Abstract

Most of the contemporary Muslim economies are implementing monetary policy with interest or quasi interest rates. Contemporary Islamic economic and financial systems have been developed under the dominance of capitalistic conventional economic and financial systems. It is practically impossible for a market economy to think of regulating a monetary system without an interest-based tool. The interest, which in Islamic financial terminology is equivalent to riba, is strictly prohibited to be used directly or indirectly in any transaction. Hence, this chapter provides an overview of the book regarding the issues of Islamic monetary policy and implementation and addresses the question of how the monetary sector and monetary policy will be managed in the absence of interest. Moreover, this chapter highlights several theoretical and empirical insights regarding monetary economics and policy from Islamic perspectives. It also discusses the issues and challenges in practice in terms of their effect on growth and financial stability. This chapter suggests that by adopting rate of profit as a benchmark policy rate, the goal of distributive social well-being and equity could be achieved and that numerous logical flaws in the contemporary monetary economics vis-à-vis Islamic monetary economics should be highlighted clearly.