Monetary management in an Islamic economy

Due to the restriction of riba, monetary management in an Islamic economy differs from the conventional capital system in a basic and important way. Interest is prohibited and considered unjust, because when money is lent, it is used to create either a debt or an asset. If it creates debt, it is not justifiable for the lender to receive a return. If the money is used to create additional wealth, the lender should be entitled to a proportionate share of this wealth, not the small fraction represented by the interest rate. Banks and money markets in an Islamic system perform the same essential functions as those in the traditional system, but without the payment or receipt of interest. The challenge for Islamic money markets is to provide liquidity, security, and profitability while still adhering to the rules of Shari’a. The role of the state in an Islamic economy is to ensure that the market is able to function with only essential supervision and everyone has equal access