But even less severe recessions are associated with painful consequences for many individual workers and their families. With respect to the second objective – that of price stability – there is now a broad consensus among policymakers, academic economists, and the general public in support of the principle that maintaining a low and stable inflation rate provides lasting benefits to the economy.
Islamic financial system lays down rules of conduct and contractual arrangements, and offers feasible financing structure which emphasize trade and equity financing that together will help the much needed financial diversification in Islamic countries. Islamic finance also has potential to blend economic and social objectives and address the ethical aspects of financing effectively.