ISLAMIC MONETARY AND FISCAL POLICIES IN THE IMPLEMENTATION OF THE CONCEPT OF MONEY IN INDONESIA'S ISLAMIC ECONOMIC SYSTEM

Abstract

This study analyzes the implementation of Islamic monetary and fiscal policies in realizing the concept of money within Indonesia's Islamic economic system. The research employs a qualitative approach with descriptive-analytical methods, utilizing primary data from in-depth interviews with regulators, Islamic banking practitioners, academics, and managers of Islamic social finance institutions, supplemented by comprehensive document analysis of policy frameworks and institutional reports from 2015-2023. The findings reveal that Islamic monetary instruments, particularly the Islamic Interbank Money Market (PUAS) and Sharia Bank Indonesia Certificates (SBIS), have effectively facilitated liquidity management without interest-based mechanisms, thereby upholding money's fundamental role as a medium of exchange. Simultaneously, Islamic fiscal instruments, especially zakat distribution through productive economic programs, have ensured continuous money circulation in the real economy, directly supporting economic justice and stability. However, the study identifies significant challenges including regulatory fragmentation between institutions, limited public understanding of the Islamic money concept, and coordination gaps between monetary and fiscal authorities. The research concludes that strengthening institutional synchronization, enhancing public financial literacy, and developing innovative policy instruments are crucial for optimizing the implementation of Islamic monetary and fiscal policies in Indonesia. These findings provide valuable insights for policymakers and contribute to the theoretical development of Islamic economics regarding the concept of money.