The purpose of the central banking: Managing an abstract, concocted, out of the blue Money

What is un-Islamic about central banking? The purpose of the central bank:

Central bankers abstract, concocted, out of the blue currency:

The purpose of the central bank is to monitor its currency such as its magnitude and its value. And it does so by monitoring inflation rate and setting its borrowing and lending rates. The product of central banks cannot survive without a legal support and therefore its product also known as legal tenders. The names such as Dollars, Dirhams or Rupees are abstract words and they got their description in a market economy in terms of goods and services they can fetch. This phenomenon is in contrast to the practices prevailing during Prophets time-period. During this period money such as dirhams, and dinars were not only defined but they have independent description in terms of it content, and characteristics Such as dinars and dirhams were made of gold and silver respectively.

Central bankers watch-dog: INFLATION

Central bankers believe that inflation is pure monetary phenomenon. On the domestic front, central banks can increase policy rates, discount rates, and reverse repo rate to discourage banking system to demand its currency and therefore control inflation. Similarly, central bankers by intervening in foreign exchange markets can control imported inflation. Whatever be the choice of central bankers policy mix, it does not come without cost.

Central banking: public finance, banking operations, forex

A monetary construct such as rupees can affect economy through various channels. The biggest beneficiary of the seignorage is the government. Government can pursue expansionary fiscal policy by borrowing from central banks directly or indirectly through banking system. This phenomenon can reduce the willingness of the government to improve its tax profile. Similarly, the banking community requires a central banker to fulfill its liquidity needs. The central bankers compromise to the banking community and keep interbank money market vibrant and resilient. In the absence of central banking, the banking community would take pain to mobilize deposits as well as keep interbank money market interest rate volatility. And also the beneficiary of monetary construct such as central banking is the external sector of the economy including both trade and services.