ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Islamic money market must be approved by the relevant Shariah authority, while for conventional money market approved by the relevant financial regulator.
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Islamic money market structured based on assets, equity and debt, while for conventional money market structured based on loan contract only.
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Islamic money market and conventional have same on obtaining short-term funding based on Shariah laws and principles.
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Islamic money market opens for both Islamic and conventional investors, while for Conventional opens only for conventional investors only.
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Detailed explanation-1: -Conventional Bank treats money as a commodity and lend it against interest as its compensation. Islamic banking products are usually asset backed and involves trading of assets, renting of asset and participation on profit & loss basis.
Detailed explanation-2: -In Islamic banking interest is prohibited, it is asset-based financing where the trade of elements is not permissible by Islam. Conventional Banking is based on the Man-made laws and the banking system is profit-oriented. The purpose of conventional banking is to make money through interest.
Detailed explanation-3: -Conventional accounting concentrates on identifying economic events and transactions, while Islamic accounting must identify socio-economic and religious events and transactions. This is not to consider that Islamic accounting is not concerned with money when running a business.
Detailed explanation-4: -The purpose of conventional accounting is to facilitate informed decision for resource allocation, while Islamic accounting, on the other hand, aims at enabling a user to ensure whether entities abide by Islamic ethics and principles.