Islamic Treasury Bills: New Instrument for Financing

Unlike the developed countries in the world, the Iranian economy is bank-oriented, and about 80% of the supply is provided by banks, and only 20% is provided by the capital market. One of the important tools in the financial market is treasury bills. Due to the ban of Riba in Islam, traditional treasury bills can not be used in the Islamic financial system. Therefore, the Islamic capital markets require low-risk short-term financial instruments that can fill the vacuum of traditional treasury bills. This instrument is Islamic treasury bills which are a new financial tool introduced by the government since 2013 to settle claims of non-government creditors. The main purpose of this tool is to finance the government deficit in the short term. Although the government applies these tools mainly to finance part of the budget deficit, settle debts to contractors and banks and achieve further financial discipline, they are also used to expand and improve the capital and money market.