Review an Article

Assalamualaikum.wr.wb.

              Hello! My name is Elviana L.M . I'm from XI MIPA 9 . And at this moment I want to tell you about the article that I have read before. The title of that article is How Islamic finance can manage rupiah stability. In The beginning, I'm explained that the rupiah dropped to a new low of 14.418 against the US dollar On July 3 according to the Jakarta interbank spot dollar rate and in April 2018 The capital flow from Indonesian bond market amounting to almost US$ 1,9 billion because of this factor creation instability for the rupiah over the years and if focus to the capital flow there are two steps or way to solved the problem.

              First, we need to reduce impact sensitivity to capital outflow by reducing dependency toward it. Second, we need to attract capital inflow that it less sensitive to global externalities. There are growing discussion on how Islamic finance may contribute to creating financial system stability.

There are two important tenets of Islamic finance that may contribute. First there is principle that all transactions in Islamic finance must be asset-backed, hence eliminating the possibility of speculative transactions that empirically have been shown to create volatility and instability. Second, there is the principle of risk-sharing between counterparties involved and eventually curb financial instability.

              According to financial services authority data, on the list of recent infrastructure projects that utilize Islamic financial instrument may reduce the need for the issuance of global government bonds, hence minimizing potential pressure on the rupiah that stems from capital outflow from the bond market.

My Opinion

              In my opinion I agree with this article because we that instability happen because of the speculative and there is a tax and according in 1998 sariah bank still stable when another conventional bank  were attacked by money crisis from that experience we can learn that Islamic finance can manage rupiah stability.