Articles
Creation of money and the role of central bank in an Islamic framework: a simulation for Pakistan
The paper attempts to formulate, in the context of an Islamic economy, a practical model through which monetary management could be practiced in the absence of interest rate. Having developed the model, it has also been applied to the case of Pakistan to simulate a complete process of monetary management with interest-free banking. Four steps are envisaged in this process: assessment of demand for money; determining the size of the outside and the inside money; quantifying needs of the major claimants of money; and actual process of money creation and distribution.