An Attempt to Develop SharīʿAh Compliant Liquidity Management Instruments for the Financier of Last Resort : With Reference to Qatar Development Plan

In 2011, Islamic banking reached around 24% of the banking sector in Qatar, yet Qatar Central Bank (QCB) has not developed a Sharīʿah compliant financier of last resort. This paper investigates to which extent the available liquidity management instruments for Islamic banks are Sharīʿah compliant. Each instrument is analyzed in the context of Sharīʿah standards. Findings of this analysis suggest that the available instruments some Sharīʿah issues, such as ribā, tawarruq, and ijārah ʿīnah. We propose three alternative Sharīʿah compliant liquidity management instruments for the financier of last resort, as well as the interbank market. The first instrument is short-term muḍārabah deposits. The second, is to sell Islamic banks' leased assets to the central bank. Whereas, the third is open market operations utilizing tradable ṣukūk