Islamic banks need Shari‘ah-compliant ways to manage short-term liquidity among themselves. Without such a system, they may be forced toward conventional banks for short-term funds where open or disguised interest becomes a serious problem.
A cooperative inter-bank fund using a mix of valid Islamic assets such as Murabahah and Ijarah is proposed as one possible direction, including very short-term transactions.
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Islamic Banking: Operational Mistakes and the Way Forward
Islamic banks need Shari‘ah-compliant ways to manage short-term liquidity among themselves. Without such a system, they may be forced toward conventional banks for short-term funds where open or disguised interest becomes a serious problem.
A cooperative inter-bank fund using a mix of valid Islamic assets such as Murabahah and Ijarah is proposed as one possible direction, including very short-term transactions.