Incorporating the Two Functions of Portfolio Management and Payment Services in the Banking System and Presenting a Favorable Model from the Islamic Banking Perspective

In the current fractional reserve banking system, the two functions of portfolio management and payment services are incorporated simultaneously. The portfolio management refers to the bank''s function in absorbing and allocating funds. The function of payment services also refers to the use of bank debt in settlement of transactions, which is required for the existence of money-creation power by banks. The current banking system has created problems such as instability, banking crises, discrimination in income distribution, undermining democracy and sustainable development, and so on. The problem of this research is to identify the optimal alternative model from the perspective of Islamic economy. The method of answering is through review, description and analysis of the material and drawing conclusions in that field. The results of this study show that in Islamic banking, the two functions of portfolio management and payment services have to be separated.  Lastly, the advantages of this proposed system, in addition to solving the problems of the current fractional reserve system, are the cases of greater compatibility of this banking system with the macro goals of the Islamic economic system and the nature of Islamic banking, and removing the suspicion of usury.