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 10: Turkey

Akhand Akhtar Hossain

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

Extract

Turkey is a transcontinental country and an emerging, large market economy. It extends sufficiently far east to occupy all of Anatolia in Western Asia and in its western extremity straddles the Sea of Marmara and the Bosphorus or Istanbul Strait into geographical East Thrace, Southeastern Europe. Its land mass is roughly rectangular in shape, about 1500 kilometres long and averaging about 500 kilometres wide. Home to a population of 76 million, Turkey therefore has a relatively low population density, at about 97 persons per square kilometre. Turkey’s location at the crossroads of Europe and Asia has throughout recorded history conferred great strategic importance upon it – economic, political and military. In 1945 Turkey joined with other founding countries to form the United Nations. Its 1952 accession to membership of the North Atlantic Treaty Organization (NATO) raised its political and military clout; and in 1960 it was a founding signatory to the Convention on the Organisation for Economic Co-operation and Development (OECD), ratifying its membership in August 1961. Turkey is an upper middle-income country with a per capita income of about US$18 000 as measured by purchasing power parity.

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