Interest free banking

The author presents the stages of the evolution of the field of Islamic finance. Every other economic framework underwent analogous evolution, it is believed. It is shown that capital and enterprise are two separate entities. Capital on its own is not a factor of production--thus it is not appropriate to grant returns on capital as if it were such a factor. It is believed that this new understanding of capital will make the ban on interest appear more sound. In discussing banking, the author sees a two level Mudarabah involving depositors, the bank, and firms invested in. Public debt, according to the author, will be an altogether different matter in an economy without interest. Treasury bills are seen to have a role. Instead of regulating the rate of interest, central banks will use profit sharing ratios to keep a handle on expansion. The author's proposed Islamisation scheme begins with reforms within the central bank. The role played in the economy by banks can be filled at least as