Yesterday our central bank, we are informed, reduced statutory reserves requirement from 4% to 3.5 %. The whole idea is our central bank thinks, as the whole world is thinking, that the nation’s economy is going to go down in the near future. So the rationale is leave more money in the banks’ hands so they will lend to companies who will then generate more employment and output in order to counter the falling economy.
Towards a Just Monetary System have very serious reservations against the current economic and banking system. Especially in the light of the required Muamalat system to be practiced by Muslims as expounded in the Quran and Sunnah. But let’s leave that be for the time being and address things as they are.
First of all is it true the banks will lend more to corporates when they have more funds in their hands? Yes this is what Western knowledge believes, this is what the Economics and Banking subjects we learn at universities say, this is what the Professors of Harvard and London School of Economics say, but is it true?
For what higher title do we carry than to be the Vice Regent of Allah on this earth?
" By time, verily Man is in loss except those who believe and do righteous deeds. And reminds one another with truth. And reminds one another with patience." Surah Al-'Asr.
"The person who utters a word which meets with God's favour may think it has not been heard, yet for this word, God will raise him to a higher level of Jannah. Conversely, the person who utters a word that stirs God's anger may give no thought to what he said, only to have God cast him in Hell for seventy years."
(Narrated by Malik and al-Tirmidhi, also by al-Nasa'i and Ibn Majah)
"Dear God You do not burden that I must but win, but You command that I must but try. Dear God count me amongst those who try. Verily my solah, my ibadah, my life and my death is only for You, Master of all Universe. Peace and aching salutations to the love of our life Muhammad s.a.w"
How to convert and become a Muslim with Live Help by 1-to-1 chat
Thesis download : "The Negative Impact of Riba Banking on the Performance of Islamic Banking in a Dual System"