Abstract
he structure of Islamic transformation into 100 per cent reserve requirement
monetary system is explained in terms of the foundational epistemology of the
unity of divine knowledge (tawhid). In this, the role of micro-money and real
economic exchange relations is shown to arise by a natural causality. A comparative
study of endogenous money in the quantity theory of money points out significant
differences between the endogenous theory of money in Islam and mainstream
methodologies (Choudhury, 1997). A formal model of micro-money and its endogenous
relationship with the real economy is formulated with the objective goal of realizing wellbeing, economic stabilization and sustainability of development regimes. Policy
recommendations for ummatic transformation into a 100 per cent reserve requirement
monetary system with the gold-backed micro-money as currency in relation to real
economic transaction vis-a-vis shari‟ah are given towards the end of the paper.
The principal objective of this paper is to derive a simulation model explaining
the interrelationships between money, real economy, prices, economic growth and social
well-being. We argue that such a relationship between money and the real economy
cannot be explained by the existing macroeconomic conception of monetary relations,
and thereby, by the institutional structure of monetary policies in the macroeconomic
framework. Substantial changes that follow by redefining the money-real economy
relations in view of market forces and institutional structure bring forth the study of
specific linkages between money and resource mobilization within the market order. Here
a substantive study of micro-money appears. Furthermore, in the Islamic framework of
reference we find that the substantive nature of the model of money and real economy
relationship is derived from the Islamic epistemological foundations. We will elaborate
upon this epistemological derivation to establish our money-real economy model. We
will show thereby, that the most appropriate monetary system that results in the case of
the micro-money and real economy interrelations is the 100% reserve requirement
monetary system backed by the gold standard (Dinar).
Masudul Alam Choudhury. (2014) MICRO-MONEY AND REAL ECONOMIC RELATIONSHIP IN THE 100 PERCENT RESERVE REQUIREMENT MONETARY SYSTEM, Islamic Banking and Finance Review, Volume 1, Issue 1.
-
Views
360 -
Downloads
47
