Islamic money market
Based my reading, I founded that most of the stakeholder are seeking for the pure markets, which eliminate interest and other prohibited products. For this reason, Bank Negara Malaysia has made some effort of making the Islamic Money Market become one of the vital and important markets as compared to conventional money market. In addition, I mentioned that the conventional money market or Islamic money market both them have the same characteristics, purposes, and aims. However, there are some point that can differentiate between them is the instruments allowed in the Islamic money market are restricted to certain circumstances and conditions. The Islamic Money Market is one of the financial markets that all the
…show more content…
The role of Islamic money market as other market component is essential in order to generate the economic growth of the country. Same as the conventional money market, the Islamic money market functions and plays the role to the Islamic banking system to widen and deepen the Islamic financial markets in Malaysia. The Islamic financial instruments that are currently being traded in the IIMM on the basis of Bai al-Dayn are the Green bankers acceptances, Islamic accepted bills, Islamic mortgage bonds and Islamic private debt securities. Bai al-dayn is a sale of debt. To enable the sale to take place, the debts arising out of contract of exchanges or aqad al-muawadhat, such as trade financing of asset sale (based on the underlying contract of bai muajjal or bai bithaman ajil) are securitized. Other types of Islamic instruments are Government Investment Issue (GII) which lie under the concept of Al-Bai Al-Inah and Islamic Accepted Bills (IAB) which apply Al-Murabahah or cost-plus financing and Al-Bai’ Al-Dayn or debt financing concept. Moreover, Islamic Private Debt Securities (IPDS) and Negotiable Islamic Debt Certificates (NIDC) which both apply the concept of Al-Bai’ Bithaman Ajil or deferred payment sale and Al-Bai’ Al-Dayn or debt financing. Addition to the Islamic Private Debt Securities (IPDS) is the concept of Al-Murabahah or cost-plus financing.
Islamic Money Market Instruments