Central Banking and Monetary Policy in Muslim-Majority Countries

Central Banking and Monetary Policy in Muslim-Majority Countries

Akhand Akhtar Hossain

This book reviews key aspects of central banking and monetary policy in selected Muslim-majority countries. While reviewing country-specific experiences and issues in inflation and monetary policy, and analysing them from an historical context, emphasis is given to the evolution of Islamic banking and finance and the consequent institutional developments for maintaining price stability. One recurring theme is that, although Islamic banking and finance may have created some complexities, it remains consistent with Classical monetary theory and has created opportunities for improving the infrastructure of central banks and monetary policy to maintain both price and economic stability. The introduction of Islamic banking and finance strengthens the argument for low and stable inflation and rule-based monetary policy. Monetary policy frameworks in these countries include exchange-rate pegging, monetary targeting and inflation targeting under varied restrictions on capital flows. Macroeconomic problems under these regimes are also highlighted and their policy implications drawn.

Chapter 4: Egypt

Akhand Akhtar Hossain

Subjects: asian studies, asian economics, economics and finance, asian economics, islamic economics and finance, money and banking


Egypt is one the most populous countries of the Middle East and North Africa (MENA) region. Its population of about 85 million is the 15th largest in the world. Egypt boasts one of the earliest civilizations in recorded history. The relevant historical context of this chapter begins relatively recently, with Egypt’s declaration of independence on 22 February 1922 from the Ottoman Sultan, only to lose its newfound independence in short order when King Farouk led it into perceived subjugation once again, this time as a British protectorate. This move was deeply resented by the military and the public alike. Finally, in the 1952 revolution, King Farouk was forced by the military to abdicate in favour of his son Fuad. On 18 January 1953, the Republic of Egypt was declared, with General Muhammad Naguib as first President of the Republic. His forced resignation came in 1954 at the hands of Gamal Abdel Nasser Hussein, the architect of the Free Officers movement that had toppled King Farouk two years earlier. The Free Officers movement had a pan-Arab nationalist tone with socialist economic programmes and policies. With Nasser’s accession to the Presidency, then, Egypt’s post-revolution economic programmes and policies followed a sustained socialist economic development path that many newly independent countries of Asia and Africa subsequently attempted to emulate, with varied outcomes.

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