Istisna Securities (Commission to Manufacture), an Instrument for Monetary Policy

Regarding the prohobition and nullity of interest in Islamic economics and successively, revision of the law of banking operation of Iran, open market policy, which is based on interest rate, has no effectiveness and central bank looses its main monetary policy instrument for controlling liquidity.The proposed Istisna’ securities could be an alternative for bonds as an instrument and by selling and buying these securities in primary and secondary markets and by applying the appropriate monetary policies, the central bank could attain goals like increasing employment, stabilizing the general level of prices, improving the balance of foreign payments and economic growth. Identifying Istisna’ contract and explaining its nature, this paper has tried to correct it from the perspective of Islamic jurisprudence, thereafter explains how to apply it in the economy of the country and how central bank take advantage of Istisna’ securities towards economic goals.