Monetary and Financial System (MAFS)

Handbook-2023 Syllabus
ON
Paper: 01 Monetary and Financial System (JAIBB)
INDEX

Module Topics Page No.

A Money and Monetary System 13-35

B Payment System 36-45

C Financial System 46-63

D Financial Institutions 64-95

E Financial Markets 97-139

F Islamic Financial System 140-161

Regulatory Framework for Financial, Monetary and

G 162-186
Payment System
Short Notes 186-205
Some Important MCQ for 96th JAIBB Exam 206-222
Monetary and Financial System 96th Question Paper 223-224

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 Monetary and Financial System (MAFS)
SYLLABUS-2023
PAPER- 1: Monetary and Financial System (JAIBB)
Full Marks: 100
Module-A: Money and Monetary System

• Concept and Functions of Money; Kinds of money; Demand for Money; Measures of
money supply: narrow money and broad money; Constituents of Monetary System: Central
Bank and Commercial Banks. Creation of Money by Commercial Banks.

Module-B: Payment System

• Concept, Different payment options, Pros and Cons of different payment types (Cash,
Cheques, Debit Card, Credit Card, Mobile payments, On-line payments, Electronic fund
transfers). Evolution and Growth of Bangladesh Payment System.

Module-C: Financial System

• Concern of Finance, Modes of Finance (Direct and Indirect); Concept of Financial System,
Relationship among Financial, Monetary and Payment Systems; Constituents of Financial
System: Financial Institutions, Financial Instruments and Financial Markets. Financial
Infrastructure and Superstructure. Financial System of Bangladesh.

Module-D: Financial Institutions

• Types of Financial Institutions: Banking Financial Institutions (BFIs) and Non-bank
Financial Institutions (NBFIs); Functions and Growth of BFIs and NBFIs in Bangladesh.
Module-E: Financial Markets
• Functions of Financial Markets; Classifications: Money Market and Capital Market;
Banking, Security and Insurance Market; Primary Market and Secondary Market including
OTC market; Micro-finance and micro-credit market; International Financial Market.
Module-F: Islamic Financial System
• Islamic Economics, Finance and Banking; Principles of Islamic Financial System
(Prohibition of Interest, Risk Sharing, etc.); Relation between Religion and Finance in Islam;
Source of Shariah Law; Islamic Financial Instruments.
Module-G: Regulatory Framework for Financial, Monetary and Payment System:
Role of BB, BSEC, IDRA and MRA.

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 Monetary and Financial System (MAFS)
Table of Contents
Module-A Money and Monetary System ................................................ 13
Q-1). What is money? What are the Characteristics of Money? .................................................. 13
Q-2). What are the functions of money? ...................................................................................... 14
Q-3). Why is the unit-of-account function of money crucial to the operation of an economy?.. 14
Q-4). Explain how money functions as a standard of deferred payments. .................................. 15
Q-5). Explain how money functions as a store of value. Is money the only store of value? ........ 16
Q-6). What is the difference between money as a store of value and the other assets? ............ 17
Q-7). Are long-term bonds a store of value? ................................................................................ 17
Q-8). What effect does inflation have on the use of money as a unit of account, a medium of
exchange, a standard for deferred payment, and a store of value? ............................................ 18
Q-9). What are the types/categories of Money?.......................................................................... 19
Q-10). Describes the differences between Fiat money and legal tender money. ........................ 20
Q-11). Describes the differences between legal tender money and non-legal tender money or
credit money. ................................................................................................................................ 20
Q-12). Is Credit Card money? If you use a credit card' to purchase goods or services on the
internet, does this affect the MI or M2 money supply or both or neither? Explain. (96th exam) 21
Q-13). Define Demand for Money. Why general people will have demand for money? Why do
people hold money? ..................................................................................................................... 22
Q-14). What are the differences between Transaction Motive and Precautionary Motive? ...... 23
Q-15). Which sort of demand for money is influenced by income and which by rate of interest?
...................................................................................................................................................... 23
Q-16). What is money supply? How money supply is measured? (96th exam) ............................ 24
Q-17). Explain Narrow money (M1) and Broad Money (M2)? ..................................................... 25
Q-18). Compare and contrast MI and M2 money supply. (96th exam) ......................................... 26
Q-19). Define Base Money or High-Powered Money. How it works? .......................................... 27
Q-20). What constitutes the monetary base? How does the central bank control the monetary
base? (96th exam).......................................................................................................................... 28
Q-21). From the following information measure the monetary aggregate of M1 & M2: (96 th
exam) ............................................................................................................................................ 29
Q-22). What are the determinants of Money Supply? (96th exam) .............................................. 30
Q-23). How money supply is determined OR Can Monetary authority or Central bank directly
control money supply? Explain. (96th exam)................................................................................. 31
Q-24). Discuss the role of commercial banks in process of Money supply. (96th exam) .............. 32
Q-25). Define monetary system? What are the constituents of monetary system? (96th exam) 33

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 Monetary and Financial System (MAFS)
Q-26). What are the Components of Monetary System of Bangladesh? ..................................... 33
Q-27). What are differences between Monetary system and financial system? ......................... 34
Q-28). How Creation of Money works by Commercial Bank? Or How money is created? .......... 34
Q-29). Role of Banking System for Secondary Money Creation in BD Economy .......................... 35
Module-B: Payment System .................................................................... 36
Q-1). Define Payment System. Describes payment options available in Bangladesh. ................. 36
Q-2). Define Cheque and classification of cheque as per NI act 1881.......................................... 37
Q-3). What are advantage and disadvantage of cheque? (96th exam) ......................................... 37
Q-4). Difference between bearer cheque and Crossed Cheque. .................................................. 38
Q-5). Define Debit Card and Credit card. (96th exam) .................................................................. 39
Q-6). What is QR code? Recently Bangladesh Bank introduced an interoperable Bangla QR to
popularize payments for goods and services using various payment instruments, including bank
accounts, debit, credit or prepaid cards, MFS and e-wallet accounts. Do you think that we are
heading towards a cashless society in the near future? Give your opinion. (96th exam)............. 40
Q-7). What are the concept/features of mobile financial services (MFS)? Or What do you mean
by interoperability of Mobile Financial Services? What might be its benefits? ........................... 41
Q-8). Discuss the problems and prospects of MFS in Bangladesh. How can we overcome those
problems? Or, Put forward the problems and prospects of Mobile Financial Service (MFS) in
Bangladesh. How can those problems be overcome?.................................................................. 42
Q-9). How MFS and Agent Banking contribute to deepen financial inclusion?............................ 43
Q-10). Define electronic fund transfer. What are the modes of Electronic Fund Transfer? ........ 44
Q-11). Describes evaluation and Growth of Bangladesh Payment System. ................................. 45
Module-C: Financial System ................................................................... 46
Q-1). Define finance/concern of finance. What are the modes of finance? ................................ 46
Q-2). Summarize difference between Direct finance and Indirect finance. ................................. 47
Q-3). Why Indirect finance prefer to direct finance for lending or borrowing funds? Or Why do
both surplus units and deficit units prefer Indirect Mode of Finance to Direct Mode of Finance?
...................................................................................................................................................... 48
Q-4). In a formal financial system, who does practice direct mode of finance? Which one is
riskier mode of finance from surplus economic unit point of view and why? ............................. 49
Q-5). Describes the Concept of Financial System. ........................................................................ 50
Q-6). What is Financial, monetary and payment systems? Describe relationship among them. 50
Q-7). Define Financial System in Bangladesh. What are its constituents? (96th exam)................ 51
Q-8). Describe the functions of financial system. ......................................................................... 53
Q-9). Explain how a financial system can contribute towards economic development of a
country. ......................................................................................................................................... 54

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 Monetary and Financial System (MAFS)
Q-10). How come the payment role of financial system can contribute towards economic
development of a country? .......................................................................................................... 55
Q-11). How do you define financial instruments? Classify financial instruments with examples.
...................................................................................................................................................... 56
Q-12). How can you explain "financial development"? How it can be differentiated between
"demand-following" and "Supply-lending" financial development?............................................ 57
Q-13). Explain the financial development indicators. Which is the most appropriate for
indicating financial development of a country like Bangladesh? (96th exam) .............................. 59
Q-14). Describes Financial Infrastructure in Bangladesh Economy. ............................................. 61
Q-15). Describes Financial superstructure in Bangladesh Economy. Difference between financial
infrastructure and financial superstructure. ................................................................................ 61
Q-16). What are the main challenges facing the global financial system today? What steps can
governments and financial institutions take to address these challenges................................... 63
Module-D: Financial Institutions ............................................................ 64
Q-1). What is Financial Institution/intermediaries? What are the Different types of Financial
Institutions/ intermediaries (FIs)? ................................................................................................ 64
Q-2). What is the precondition for successful Intermediation activities of banking financial
Institutions? .................................................................................................................................. 65
Q-3). Describe the functions of Banking Financial Institutions (BFIs) and Non-Banking Financial
Institutions (NBFIs). (96th exam) ................................................................................................... 66
Q-4). How BFIs and NBFIs works as financial intermediaries? (96th exam) .................................. 67
Q-5). In spite of existence of so many financial Intermediaries, why would banks be needed at
all? ................................................................................................................................................. 69
Q-6). Why we cannot write cheques against the liabilities of Non-bank financial Institutions? . 70
Q-7). Describe the difference between BFIs and NBFIs? .............................................................. 70
Q-8). What are the main sources of fund of financial institutions? ............................................. 71
Q-9). Banks intermediation may be treated as "risk arbitrage" What does it mean? What is
meant by simple deposit multiplier? ............................................................................................ 73
Q-10). Explain the basis of providing long-term lending according to Anticipated Income Theory.
...................................................................................................................................................... 74
Q-11). Show how come a bank balance between its liquidity and medium term lending
according to Shiftability Theory. ................................................................................................... 75
Q-12). Explain the "Real Bills Doctrine" in terms of providing short-term loans. ........................ 76
Q-13). Discuss types of services provided by Banks in Bangladesh. ............................................. 76
Q-14). Explain the trends/factors which are reshaping commercial banking all over the world
now-a-days. .................................................................................................................................. 79
Q-15). Are Bank dying and special? .............................................................................................. 80

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 Monetary and Financial System (MAFS)
Q-16). What do you mean by Globalization of Banking? Explain the factors that may cause
globalization of banking. Does globalization increase the risk of failure of bank? ...................... 81
Q-17). Discuss different source of fund of Financial Institutions. ................................................ 82
Q-18). Classify source of fund of Financial Institutions. ............................................................... 84
Q-19). What are the approaches used by Financial Institutions for fund management? Or How
Financial Institutions manage its fund? ........................................................................................ 84
Q-20). How do you differentiate between Pool of Fund and Conversion of Fund Approach for
the matter of fund management in financial institutions? .......................................................... 85
Q-21). Discuss different aspects of Asset Liability Management (ALM)....................................... 87
Q-22). Give an overview of the present situation of banking sector of Bangladesh. Does
Bangladesh need more banks? Justify your arguments. .............................................................. 88
Q-23). Discuss various natures of financing of non-bank financial institutions. .......................... 89
Or, Discuss the contributions of non-bank financial institutions in the economic development of
a developing country like Bangladesh. ......................................................................................... 89
Q-24). Describe present state of financial crisis faced by non-bank financial institutions. ......... 90
Q-25). Indicate differences between commercial Bank and specialized bank. ............................ 91
Q-26). What is meant by consumer banking? How risk of consumer financing can be minimized?
...................................................................................................................................................... 91
Q-27). What is agent banking? State the main services provided by Agent Banking .................. 91
Q-28). What is SME financing? What SME products are offered by different banks? Write salient
features of SME Products. ............................................................................................................ 92
Q-29). What are the features of SME? ......................................................................................... 93
Q-30). Please discuss, what will be the impact on the economy if more private banks be allowed
in our country. Or can our economy allow more private banks? Give your suggestions............. 93
Q-31). What is online banking? Give example. What are the limitations of online banking? ..... 94
Q-32). Discuss the potentials and challenges of mobile banking and services in terms of financial
inclusion. ....................................................................................................................................... 95
Module-E: Financial Markets ................................................................. 97
Q-1). What are the basic concepts of financial market? What are the Functions of Financial
Markets? ....................................................................................................................................... 97
Q-2). What is Financial Markets? Different types of financial market existing in Bangladesh. ... 98
Q-3). Define Money Market. What are the characteristics of money market? ........................... 99
Q-4). What are the purpose/objectives of money market? ....................................................... 100
Q-5). Describes about Money market instruments. ................................................................... 101
Q-6). Why do govt. and businesses use the money markets?.................................................... 103

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 Monetary and Financial System (MAFS)
Q-7). Which of the money market securities is the most liquid and considered the most risk-
free? Why?.................................................................................................................................. 104
Q-8). Who issues commercial paper and for what purpose? ..................................................... 104
Q-9). What would be your annualized yield on the purchase of a 182-day Treasury-Bill for
$4,925 that pays $5,000 at maturity? ........................................................................................ 105
Q-10). If you want to earn an annualized yield of 3.5%, what is the most you can pay for a 91-
day Treasury-Bill $5,000 at maturity? ........................................................................................ 105
Q-11). The price of 182-day commercial paper is $7,840. If the annualized yield is 4.04%, what
will the paper pay at maturity? .................................................................................................. 106
Q-12). The price of $8,000 face value commercial paper is $7,930. if the annualized yield is 4%,
when will the paper mature? ..................................................................................................... 106
Q-13). The annualized yield is 3% for 91-day commercial paper and 3.5% for 182-days
commercial paper. What is the expected 91-day commercial paper rate 91 days from now? . 107
Q-14). What is meant by Capital Market? Discuss the characteristics of the Capital Market in
Bangladesh? ................................................................................................................................ 108
Q-15). Describes about Capital market instruments in Bangladesh. .......................................... 109
Q-16). Difference between Money Market and Capital Market. ............................................... 111
Q-17). What are the types of Capital market in Bangladesh? .................................................... 111
Q-18). Describes Pros and cons of Capital Market in Bangladesh. ............................................. 113
Q-19). Using supply and demand framework for bonds, show why interest rates are procyclical.
Show the effect on interest rates when the risk of loss of bond rise under the framework. (96th
exam) .......................................................................................................................................... 115
Q-20). Who are the capital market intermediaries describing in brief? .................................... 116
Q-21). A financial adviser has just given you the following advice: “Long-term bonds are a great
investment because their interest rate is over 20%”. Is the financial adviser necessarily, right?
.................................................................................................................................................... 116
Q-22). If there is a decline in interest rates, which would you rather be holding, long-term
bonds or short-term bonds? Why? Which type of bond has the greater interest-rate risk? .... 117
Q-23). Explain what effect a large govt. deficit might have on interest rates ............................ 118
Q-24). What are coupon bonds and zero coupon bonds?.......................................................... 118
Q-25). How to calculate zero coupon bond present Value & yield rate? Calculate the present
value of $1,000 zero-coupon bond with 5 years to maturity if the required annual interest rate
is 6%. ........................................................................................................................................... 119
Q-26). A coupon bond that has a Tk.1000 par value and a coupon rate of 10%. The bond is
currently selling for Tk.1150 and has eight years to maturity. What is the bond’s yield to
maturity? .................................................................................................................................... 120

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 Monetary and Financial System (MAFS)
Q-27). A lottery claims its grand prize is Tk.10 million, payable over 20 years at Tk.500,000 per
year. If the first payment is made immediately, what is this grand prize really worth? Use a
discount rate of 6%. .................................................................................................................... 120
Q-28). What is the price of a perpetuity that has a coupon of Tk.50 per year and a yield to
maturity of 2.5%? If the yield to maturity doubles, what will happen to its price? ................... 121
Q-29). A bond makes an annual Tk.80 interest payment (8% coupon). The bond has five years
before it matures, at which time it will pay Tk.1000. Assuming a discount rate of 10%, what
should be the price of the bond? ............................................................................................... 122
Q-30). The yield on a corporate bond is 10%, and it is currently selling at par. The marginal tax
rate is 20%. A par value municipal bond with a coupon rate of 8.5% is available. Which security
is a better buy? ........................................................................................................................... 122
Q-31). If the municipal bond rate is 4.25% and the corporate bond rate is 6.25%, what is the
marginal tax rate, assuring investors are indifferent between the two bonds? ........................ 123
Q-32). A Tk.1000 par bond with an annual coupon has only one year until maturity. Its current
yield is 6.713%, and its yield to maturity is 10%. What is the price of the bond?...................... 123
Q-33). A one-year discount bond with a face value of Tk.1000 was purchased for Tk.900. What
is the yield to maturity? What is the yield on a discount basis? (96th exam) ............................. 124
Q-34). What steps do you suggest to develop securities markets in developing countries like
Bangladesh? ................................................................................................................................ 125
Q-35). What are the features and Legal framework of deposit insurance scheme to protect
depositors' interest of banks? .................................................................................................... 127
Q-36). What is meant by OTC Market? Write down its features. (96th exam) ........................... 128
Q-37). What is an Initial Public Offering and How to Make an Offering to the Public in
Bangladesh? ................................................................................................................................ 129
Q-38). Positives and Negatives aspects of an IPO ...................................................................... 130
Q-39). Define Micro-finance. Describes functions of micro finance. ......................................... 130
Q-40). Distinguish between micro-finance and micro-credit market......................................... 131
Q-41). Define Micro-credit Market. What are difference between micro credit and micro
finance in bd Economy? .............................................................................................................. 131
Q-42). Describes about International Financial Market. what are segments of international
financial market? ........................................................................................................................ 132
Q-43). What is the role of the foreign exchange market in the global financial market? (96th
exam) .......................................................................................................................................... 134
Q-44). What are the Instruments that used in International Financial Market? ....................... 135
Q-45). Who are Key Players in Foreign Markets? ....................................................................... 135
Q-46). At the current state of globalization, every country is internationally connected. What do
you know about global integration of the financial market? (96th exam) .................................. 136

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 Monetary and Financial System (MAFS)
Q-47). Define 'balance on current account' and 'basic balance' in international balance of
payments. (96th exam) ................................................................................................................ 137
Q-48). Which of the following transactions would increase a current deficit? (96th exam) ...... 138
Q-49). What are Motives for Using the International Money & Capital Markets? .................... 139
Module-F: Islamic Financial System ..................................................... 140
Q-1). Describes Islamic Economics. What are the basic principles of Islamic economic system?
.................................................................................................................................................... 140
Q-2). What do you mean by Riba? How is it interpreted in Islam and what are the significant
implications of prohibiting Riba in Islam? .................................................................................. 141
Q-3). Explain the principle of Gharar and how it is different from Maysir or Qimar. ................ 142
Q-4). What is the role of Zakat in establishing equality in society? ........................................... 142
Q-5). State and explain the basic features of Islamic world view of economics. ....................... 143
Q-6). What is Islamic Economics and how come it is different from and similar to conventional
western economies? ................................................................................................................... 144
Q-7). Islam is perceived to be comprising of certain basic elements. State and briefly explain
those elements. .......................................................................................................................... 146
Q-8). What do you mean by Muamalat? What role does it play in Islam? ................................ 146
Q-9). What do you mean by Islamic Banking? Describe the prospective of Islamic Banking. .... 147
Q-10). Give the reasons Why Islamic banking has become popular in the world? .................... 148
Q-11). Describe Features of Islamic Banks and Islamic Banking Contracts. ............................... 149
Q-12). Briefly explain the basic fundamentals of Shari'ah Law? List major principles that must be
followed while developing Shari'ah complaint products. (96th exam) ....................................... 151
Q-13). List Shari'ah complaint Islamic banking products outlining Shari'ah principles. (96th exam)
.................................................................................................................................................... 152
Q-14). What is the relationship between religion and finance in Islam? ................................... 153
Q-15). How does Islamic finance differ from conventional finance in terms of its principles and
practices? .................................................................................................................................... 153
Q-16). What are the sources of Shariah law and how are they used in Islamic jurisprudence? 154
Q-17). Which Shariah Principles are used by Bangladeshi Islamic Banks for mobilization and
deployment of fund? .................................................................................................................. 155
Q-18). What are the main types of Islamic financial instruments? ............................................ 156
Q-19). Based on PLS principles, what are the available Islamic financial instruments? How do
you differentiate between them? .............................................................................................. 157
Q-20). How do sukuk (Islamic bonds) work and what are their benefits and risks? .................. 158
Q-21). Discuss similarities and dissimilarities Sukuk vs. Bonds. ................................................. 159

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 Monetary and Financial System (MAFS)
Q-22). What is the difference between a Mudarabah and a Musharakah in Islamic finance and
how are they used as financing instruments? ............................................................................ 159
Q-23). What do you know about shariah governance in Islamic financial institution? Outline the
key players and their role in shariah governance framework. (96th exam) ................................ 160
Q-24). Difference between Islamic banking & Traditional banking............................................ 161
Module-G: Regulatory Framework for Financial, Monetary and
Payment System: ................................................................................... 162
Q-1). What do you mean by financial regulations? Why financial regulation is needed? ......... 162
Q-2). Describe types of financial regulation? Describe different financial regulatory bodies exist
in Bangladesh. ............................................................................................................................. 163
Q-3). What do you mean by central bank? What are the main functions of Bangladesh Bank as
the Central Bank of the country?................................................................................................ 165
Q-4). Why Central Bank is termed as the banker to the government? Explain the statement in
the context of Bangladesh. ......................................................................................................... 166
Q-5). Describe the role of Bangladesh Bank as a regulator of the financial system of Bangladesh.
Or, How Bangladesh Bank regulates and supervises the financial system of Bangladesh? ....... 167
Q-6). What is the role of Bangladesh Bank in maintaining financial stability in the country? ... 168
Q-7). Write two ways how Bangladesh Bank can help the government in financing the budget
deficit. ......................................................................................................................................... 169
Q-8). Why is central Bank considered as supreme monetary and banking authority? (96th exam)
.................................................................................................................................................... 169
Q-9). Explain the qualitative and quantitative credit control measures of central Bank. .......... 170
Q-10). Explain the objectives of central Bank regulation and supervision of commercial bank.
.................................................................................................................................................... 171
Q-11). What is financial stability? How central bank as Lender of Last Resort (LOLR) to maintain
financial stability? (96th exam) .................................................................................................... 172
Q-12). Do you think the controlling management of central bank is sufficient for NPL? Or, Do
you think the role of central bank is perfect in terms of controlling NPL in commercial banks?
.................................................................................................................................................... 173
Q-13). Describes about Bangladesh Securities and Exchange Commission (BSEC) and its
functions. .................................................................................................................................... 174
Q-14). Discuss about Insurance Development and Regulatory Authority (IDRA) and its functions.
.................................................................................................................................................... 175
Q-15). Discuss the goals and functions of Microcredit Regulatory Authority (MRA). ................ 176
Describe the functions and responsibilities of BFIU.Or, Discuss the main functions of BFIU. ... 177
Q-16). What is bank rate? How Bangladesh Bank controls the credit by changing bank rate?
Give example .............................................................................................................................. 179

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 Monetary and Financial System (MAFS)
Q-17). ln your opinion, what legal and regulatory steps should be taken to rescue the non-bank
financial institutions from present crisis?................................................................................... 180
Q-18). How monetary policy is different from macroprudential policy? Discuss. ..................... 181
Q-19). Discuss the role of Bangladesh bank in the macro-prudential policy. ............................ 181
Q-20). What is meant by prudential regulation? Briefly discuss the existing prudential
regulations for banks and financial institutions. ........................................................................ 182
Q-21). Securities and Exchange Commission (SEC) acts as the regulator of Capital Market
Intermediaries and narrate its functions. ................................................................................... 184
Q-22). Describes Dhaka Stock Exchange and Explain its major functions. ................................. 185
Q-23). How customers' interests are protected by deposit insurance scheme? ....................... 185
Short Notes ............................................................................................ 186
Q-1). Explain three motives for need money. ............................................................................ 186
Q-2). Velocity of money .............................................................................................................. 187
Q-3). Monetary Policy Statement (MPS) .................................................................................... 187
Q-4). Treasury Bill Market in Bangladesh ................................................................................... 188
Q-5). Deposit Insurance Scheme ................................................................................................ 189
Q-6). Bridge Financing ................................................................................................................ 189
Q-7). Deficit Financing ................................................................................................................ 189
Q-8). Central Bank Autonomy ..................................................................................................... 190
Q-9). Venture Capital .................................................................................................................. 190
Q-10). Money Multiplier ............................................................................................................. 191
Q-11). Excess Liquidity ................................................................................................................ 191
Q-12). Primary Dealer ................................................................................................................. 192
Q-13). Capital Adequacy ............................................................................................................. 192
Q-14). Repo & Reverse Repo ...................................................................................................... 192
Q-15). Floating of Taka................................................................................................................ 193
Q-16). Convertible of Currency ................................................................................................... 193
Q-17). Bank Rate & its effectiveness .......................................................................................... 193
Q-18). Nature of Trade of Balance in Bangladesh ...................................................................... 194
Q-19). SWAP in Foreign Exchange Market.................................................................................. 194
Q-20). Monetary Policy by discretion ......................................................................................... 194
Q-21). Manage Float Exchange Rate System. (96th exam) .......................................................... 195
Q-22). Effective interest rate ...................................................................................................... 196
Q-23). Liquidity Trap ................................................................................................................... 196

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 Monetary and Financial System (MAFS)
Q-24). Whitening the black money ............................................................................................. 196
Q-25). Hyper Inflation. ................................................................................................................ 197
Q-26). The ratio between M1 and M2. ....................................................................................... 197
Q-27). Effectiveness of DIS.......................................................................................................... 198
Q-28). Trust cum Settlement Account (TSCA) (96th exam) ......................................................... 198
Q-29). Reverse repo and its impact on money supply................................................................ 199
Q-30). Bank for International Settlements (BIS). ........................................................................ 200
Q-31). Money as a store of value: .............................................................................................. 201
Q-32). Sustainable Finance. (96th exam) ..................................................................................... 201
Q-33). Money as a Unit of Account. ........................................................................................... 202
Q-34). Money Neutrality............................................................................................................. 202
Q-35). Define Sukuk Bond and Its Advantages ........................................................................... 203
Q-36). E-money. (96th exam)....................................................................................................... 204
Q-37). Stock and bond ................................................................................................................ 205
Q-38). Features of International Capital Markets....................................................................... 205
Q-39). Explain the role of “Money” in Islamic economics .......................................................... 205
Some Important MCQ for 96th JAIBB Exam.............................................. 206
Monetary and Financial System 96th Question Paper ............................. 223

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 Monetary and Financial System (MAFS)
Module-A Money and Monetary System
• Concept and Functions of Money; Kinds of money; Demand for Money; Measures of
money supply: narrow money and broad money; Constituents of Monetary System:
Central Bank and Commercial Banks. Creation of Money by Commercial Banks.
Q-1). What is money? What are the Characteristics of Money?
In short sense, Money is anything that serves as a medium of exchange. In board sense Money
is a medium of exchange that is centralized, generally accepted, recognized, and facilitates
transactions of goods and services and settlement of all debt.
In economics ‘money’ is defined as anything that is generally accepted as payment for goods
and services and for paying bad debts.
In Wikipedia, Money is any object that is generally accepted as payment for goods and
services and repayment of debts in a given country or socio-economic context.
Finally, money can be anything that can serve as a
1. Store of value, which means people can save it and use it later—smoothing their
purchases over time;
2. Unit of account, that is, provide a common base for prices; or
3. Medium of exchange, something that people can use to buy and sell from one another.
Characteristics of Money:
1. Exchangeability: A currency must be exchangeable. That is one unit is replaced by
another equal unit of money in paying debt of settlement of transactions.
2. Durability: A good currency is durable enough to be used more than just one time. It
should not be perishable. A perishable good or article should not be used as a currency
because it cannot be used multiple times and also cannot be stored for future
transactions. Therefore, to conserve the future-oriented use-value of the money, a
currency must be durable.
3. Acceptability: The currency must be universally recognized and acceptable. An
unrecognized currency or money leads to disagreement with the exchange terms.
4. Uniformity: Every bill and coin of the same value needs to look the same. Money
must be uniform in that one Tk.1000.00 bill and another Tk1000.00 bill must be able to
buy the same thing.
5. Divisibility: Money must be made in various units. You should be able to make
change. By having various units of money, goods of various value can be paid for, and
change for larger units of money can be made. Barter, on the other hand, requires
goods that are traded to be of equal value.
6. Stability: A currency must be stable in terms of value. In simple terms, money should
have a constant or increasing value. Money cannot be unstable whose value keeps
drastically changing. An unstable currency can give room to the risk of a sudden drop
in value which can hamper the acceptance and authenticity of the money system.
7. Portability: The money must be divisible into various quantities making its use better.
Money needs to be small enough so it can be conveniently carried in clothes, pockets,

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 Monetary and Financial System (MAFS)
or purses. Money if not portable can lead to an exceeded cost of transportation of the
currency itself.
8. Relative Scarcity: Money needs to be hard to manufacture. If it were possible to
manufacture money as easily as any other good, we would be flooded with counterfeit
currency
Q-2). What are the functions of money?
No matter what form money may take - be it cowry shells, beads, rocks or precious metals like
gold and silver - it serves to perform these four primary functions in the economy:
(a) Medium of Exchange: Money is the medium via which goods and services are paid
for in almost all types of market transactions in the economy. Therefore, it acts as the
medium of exchange through which goods and services are exchanged for one another.
As we can see from our own experience of day-to-day economic transactions, money is
what is used to buy goods and services from the market and it is also what we are paid
in as salary and wages for our services rendered.
(b) Unit of Account: The second important role of money in the economy is unit of
account. It provides a measurement of value in the economy. The prices of goods and
services in any modern economy is measured and denoted in terms of money. For
example, the way we measure weight in kilograms and distance in kilometer, the same
way the value of a good or service is measured (and quoted) in terms of money. Thus it
is money which enables us to measure the value of the good or service that we buy or
sell in the market.
(c) Store of Value: A store of value acts as a store of the purchasing power that is
embedded in it. It can save the purchasing power of money from the time the money is
received (as salary, earnings or compensation of any other form) until the time it is
spent to buy goods and services.
(d) Standard of deferred payments: Money is considered the standard for future
payments. Money also serves as a standard or unit in terms of which deferred or future
payments are stated. This applies to payments of interest, rents, salaries, pensions,
insurance premia, etc. In a money using system, the bulk of deferred payments are
stipulated terms.
(e) Other Functions: Money can be used as a medium of distribution of social income,
basis of Credit Creation and most common liquid asset of the economy.
These functions are crucial to the functioning of the monetary system because they underpin
the value and usefulness of money. The monetary system, which includes central banks,
financial institutions, and government policies, manages the money supply and regulates the
value of a country's currency.
Q-3). Why is the unit-of-account function of money crucial to the operation of an
economy?
Money serves as a common medium or unit of account. As various goods and services are
measurable in different units such as meter, litre and gram, it becomes difficult to measure
them using a common unit. Money has provided a common yardstick to measure all these
different units in a common denomination known as price. This has made different goods and

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 Monetary and Financial System (MAFS)
services comparable to each other in terms of their respective prices The unit-of-account
function of money is crucial to the operation of an economy for several reasons:
1. Standardized Measurement: Money serves as a common unit of account that
provides a standardized measurement for pricing and valuing goods, services, assets,
and debts. It allows for easy comparison and evaluation of economic transactions,
facilitating efficient decision-making and resource allocation.
2. Price Determination: Money as a unit of account helps establish and communicate
prices. Prices express the relative value of goods and services in terms of the monetary
unit. They provide essential information to buyers and sellers, enabling them to make
informed choices and participate in market transactions.
3. Contracts and Obligations: Money's unit-of-account function is critical for
establishing and fulfilling contracts and obligations. It allows parties to express and
specify the terms of agreements, debts, loans, salaries, and other financial
arrangements in a common monetary unit. The use of a consistent unit of account helps
ensure clarity, enforceability, and fairness in contractual relationships.
4. Financial Reporting and Analysis: Money's unit-of-account function is fundamental
to financial reporting and analysis. Businesses, governments, and individuals use
monetary units to measure and report their financial activities, such as revenues,
expenses, assets, and liabilities. This standardized measurement facilitates economic
analysis, investment decisions, and the evaluation of economic performance.
5. Economic Calculation: The unit-of-account function of money enables economic
calculation and the calculation of costs and benefits. It allows for comparisons between
the costs of production and the expected revenues from sales, aiding businesses in
determining profitability and making investment decisions. It also helps individuals
and households assess the trade-offs involved in their consumption and savings
choices.
The unit-of-account function of money provides a common denominator that facilitates
economic transactions, price determination, contract enforcement, financial reporting, and
economic calculation. It plays a vital role in enabling efficient economic coordination and the
functioning of markets and economies at large.
Q-4). Explain how money functions as a standard of deferred payments.
Deferred payments refer those payments which are made in future. Money has made deferred
payment easier. Money functions as a standard of deferred payments by providing a medium
through which obligations or debts can be settled over time. How money serves this purpose
are explained bellow:
1. Promissory Agreements: In various economic transactions, parties may enter into
agreements where one party owes a debt or obligation to another. This can include
loans, credit purchases, mortgages, or other forms of credit. The parties establish the
terms and conditions of the agreement, including the repayment amount, interest rate,
and repayment schedule.
2. Future Payment Terms: Money acts as a standard of deferred payment by allowing
parties to agree on a specific monetary amount that will be paid in the future. The
agreed-upon amount serves as a measure of value for the obligation. For example, a

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 Monetary and Financial System (MAFS)
Module-C: Financial System
Concern of Finance, Modes of Finance (Direct and Indirect); Concept of Financial System,
Relationship among Financial, Monetary and Payment Systems; Constituents of Financial
System: Financial Institutions, Financial Instruments and Financial Markets. Financial
Infrastructure and Superstructure. Financial System of Bangladesh.
Q-1). Define finance/concern of finance. What are the modes of finance?
Finance is the provision or mobilization of funds from surplus economic units to deficit
economic units. The core function of financial institutions is to transfer fund from savers to
borrowers.
Surplus units are those economic units Whose incomes are greater than their expenditures.
They are the net savers.
Deficit units are those economic units whose expenditures are greater than their incomes. They
are basically net borrowers.
Finance is a broad term that refers to the management of money, investments and other
financial assets. It encompasses a range of activities, including budgeting, borrowing,
investing, lending and managing risks.
The concept of finance is often associated with the allocation and management of financial
resources with the goal of maximizing wealth and value creation. This involves making
decisions about how to allocate capital, manage risks and generate returns.
Finance can be broken down into several sub-disciplines, including corporate finance, personal
finance and public finance. Corporate finance involves the management of a company's
financial resources, including decisions about how to invest capital, raise funds and manage
risk. Personal finance involves the management of an individual's financial resources,
including budgeting, investing and planning for retirement. Public finance involves the
management of government finances, including decisions about taxation, spending, and debt
management.
The concept of finance is central to the functioning of modern economies and involves a range
of activities that are essential for the effective allocation and management of financial
resources.
Basically, there are two types of finance that’s are-
1. Direct Finance:
Direct finance refers to the process of borrowers obtaining funds directly from lenders without
the involvement of intermediaries. This typically involves the issuance of securities such as
stocks, bonds and commercial paper. In direct finance, borrowers directly approach investors
and sell securities to them in order to raise funds. Investors who buy these securities become
creditors or owners of the company, depending on the type of security purchased.
Direct finance is usually used by large corporations, government entities and other
organizations that have established relationships with investors or have a proven track record
of financial performance. Direct finance allows borrowers to obtain funds more quickly and at
lower costs since there are no intermediaries involved. However, it may be less convenient for
borrowers who may have difficulty finding suitable investors or negotiating favorable terms.

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 Monetary and Financial System (MAFS)
In summary, direct finance can provide a flexible and cost-effective for companies and
governments to raise capital but it also requires significant financial expertise and resources to
manage the process effectively.
2. Indirect Finance:
Indirect finance refers to the process of obtaining fund with the help of financial intermediaries
such as banks, insurance companies and mutual funds. In this process, financial intermediaries
borrow funds from lenders and lend them to borrowers. Intermediaries earn income from the
spread between the interest rates they pay to lenders and the interest rates they charge to
borrowers.
Indirect finance is typically used by individual consumers and small businesses who may not
have direct access to capital markets or who may require smaller amounts of financing.
Indirect finance allows for a broader range of borrowers to obtain financing since
intermediaries can pool resources and spread risk across multiple borrowers. Additionally,
intermediaries can provide valuable services such as underwriting, credit assessment and
financial advice.
In fine, indirect finance provides a convenient and accessible means for individuals and
businesses to obtain financing but it also involves additional costs due to the intermediaries'
fees and interest rates. Financial intermediaries play a crucial role in providing liquidity to the
economy and in facilitating the flow of funds between savers and borrowers.
Q-2). Summarize difference between Direct finance and Indirect finance.
Direct finance and indirect finance are two different approaches to the process of channeling
funds from savers to borrowers in an economy. Here's a breakdown of the differences between
direct finance and indirect finance:
Definition:
Direct Finance: Direct finance involves a direct transfer of funds from savers to borrowers
without the involvement of intermediaries. It occurs when individuals or institutions lend
money directly to borrowers in financial markets.
Indirect Finance: Indirect finance involves the use of intermediaries such as banks or
financial institutions to facilitate the flow of funds between savers and borrowers.
Intermediaries collect funds from savers and then provide loans or invest in financial assets on
behalf of the savers.
Participants:
Direct Finance: In direct finance, the participants are the lenders (savers) and the borrowers.
They engage directly with each other to negotiate and determine the terms of the financial
transaction.
Indirect Finance: Indirect finance involves three parties: savers, financial intermediaries, and
borrowers. The savers deposit their funds with the intermediaries, who then use those funds to
provide loans or make investments to borrowers.
Relationship:

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 Monetary and Financial System (MAFS)
Direct Finance: The relationship between lenders and borrowers is direct and transparent.
They interact directly and negotiate the terms of the financial arrangement, such as interest
rates, repayment schedules, and collateral.
Indirect Finance: The relationship between savers and borrowers is indirect. Savers entrust
their funds to financial intermediaries, who have the expertise to evaluate and manage risks
associated with lending and investment. Borrowers then approach intermediaries to obtain
funds based on their creditworthiness and other factors.
Risk and Information:
Direct Finance: In direct finance, lenders bear the full risk associated with their lending
decisions. They need to assess the creditworthiness of borrowers and monitor the performance
of their loans. Information about borrowers may be less widely available, requiring lenders to
conduct their own due diligence.
Indirect Finance: Indirect finance transfers some of the risks from lenders to financial
intermediaries. Intermediaries specialize in assessing credit risk, managing portfolios, and
diversifying investments. They accumulate information about borrowers and use it to make
informed lending decisions on behalf of savers.
Flexibility and Customization:
Direct Finance: Direct finance offers more flexibility and customization in terms of loan
terms and conditions. Borrowers and lenders can negotiate specific arrangements that meet
their needs and preferences.
Indirect Finance: Indirect finance may offer less flexibility since intermediaries often have
standardized loan products and investment options. Borrowers have to adhere to the terms and
conditions set by the intermediaries.
Both direct finance and indirect finance play important roles in an economy. The choice
between them depends on factors such as the nature of the transaction, risk preferences, and the
efficiency of financial markets and intermediaries.
Q-3). Why Indirect finance prefer to direct finance for lending or borrowing funds?
Or Why do both surplus units and deficit units prefer Indirect Mode of Finance to
Direct Mode of Finance?
Individuals or organizations prefer indirect finance to lend or borrow fund to direct finance due
to some advantages of indirect finance over direct finance.
The main advantages to ultimate lenders are summed up below:
(1) Low risk: Lenders are interested in minimizing all kinds of risk of capital and interest loss
on loans or financial investments they make. These risks may arise in the form of risk of
default or risk of capital loss on stock-market assets. Government regulation of the
organization and working of major FIs helps in reducing risks of their creditors.
(2) Greater Liquidity: FIs offer much greater liquidity on their secondary securities to their
lenders. Demand deposits of banks are perfectly liquid. Even time deposits to be drawn upon
subject to certain conditions.
(3) Convenience: Secondary securities sold by FIs are easy to buy, hold, and sell. The
information cost and transaction cost involved are very low.

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 Monetary and Financial System (MAFS)
Q-37). Stock and bond
Stocks and bonds are two different types of investment instruments.
Stocks, also known as shares or equities, represent ownership in a company. When you buy
stocks, you become a partial owner of the company and are entitled to a share of its profits (in
the form of dividends, if the company pays them) and potential capital gains if the stock price
increases. Stocks are typically traded on stock exchanges, and their value can fluctuate based
on various factors such as company performance, market conditions, and investor sentiment.
Investing in stocks can offer the potential for higher returns but also comes with higher risk
and volatility.
Bonds, on the other hand, are debt instruments issued by governments, municipalities, and
corporations to raise capital. When you buy a bond, you are essentially lending money to the
issuer in exchange for periodic interest payments and the return of the principal amount at
maturity. Bonds are generally considered less risky than stocks because they offer fixed
interest payments and have a defined maturity date. However, the returns on bonds are
typically lower than those of stocks. Bond prices can also be influenced by factors such as
interest rate changes, credit ratings, and overall market conditions.
Both stocks and bonds play important roles in investment portfolios. Stocks have the potential
for higher returns over the long term but come with higher volatility. Bonds, on the other hand,
provide income and stability to a portfolio. The allocation between stocks and bonds in an
investment portfolio depends on an individual's financial goals, risk tolerance, and time
horizon. Some investors choose to hold a mix of both stocks and bonds to balance risk and
potential returns.
Q-38). Features of International Capital Markets.
International capital market is that financial market or world financial center where
shares, bonds, debentures, currencies, hedge funds, mutual funds and other long term securities
are purchased and sold. International capital market is the group of different country's capital
market.
It is the market for raising long-term capital
• MNCs sometimes obtain medium or long-term capital from global banks for foreign
direct investment, M&A activity, and international portfolio investments
• Eurocurrency loans refer to loans of one year or longer extended by banks initially in
Europe to foreign MNCs or government agencies.
• Such loans are generally based on the LIBOR. 3-18 S
Q-39). Explain the role of “Money” in Islamic economics
In Islamic economics, money plays a vital role as a medium of exchange, unit of account and
store of value. However, Islamic economic principles emphasize certain guidelines and
restrictions regarding the nature and use of money. Here are some key aspects of the role of
money in Islamic economics:
7. Medium of Exchange: Money serves as a medium of exchange in Islamic economics,
facilitating transactions and trade. Islamic principles allow for various forms of money,

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 Monetary and Financial System (MAFS)
including gold, silver and currencies issued by recognized authorities. The exchange of
money for goods and services should be conducted fairly and without any elements of
fraud or deception.
8. Prohibition of Riba (Interest): Islamic economics strictly prohibits the charging or
payment of interest, known as riba. This prohibition is based on the belief that money
should not generate wealth on its own without engaging in real economic activities.
Therefore, interest-based transactions, such as lending money with an added interest
amount, are not permissible in Islamic finance.
9. Emphasis on Real Economic Activities: Islamic economics encourages the
promotion of real economic activities that generate value and contribute to societal
welfare. Instead of relying on interest-bearing transactions, Islamic finance encourages
profit-sharing arrangements, equity-based investments, and risk-sharing partnerships.
This ensures that economic activities are rooted in tangible assets, entrepreneurship,
and productive endeavors.
5. Wealth Redistribution and Social Justice: Islamic economics places importance on
the equitable distribution of wealth and reducing economic disparities within society.
Zakat, which is a mandatory charitable contribution, is one of the pillars of Islamic
economics. It involves individuals giving a portion of their wealth to support the less
fortunate and promote social welfare. The concept of sadaqah (voluntary giving)
further encourages Muslims to contribute to the well-being of society.
6. Stability and Avoidance of Excessive Speculation: Islamic economics promotes
stability in the financial system and discourages excessive speculation, which is
believed to create economic instability. Activities that involve excessive uncertainty
(gharar) or speculation (maysir) are generally discouraged. Islamic finance principles
advocate for transparency, risk management, and long-term investment approaches.
In Islamic economics, money serves as a means of exchange and store of value, but it is
governed by principles that emphasize fairness, equity, and the promotion of real economic
activities. The focus is on creating an economic system that benefits society as a whole and
adheres to ethical and moral values.

Some Important MCQ for 96th JAIBB Exam

Which of the following identifies the unit-of-account function of money?
(a) Money is a convenient means of measurement.
(b) Money facilitates the exchange of goods and services.
(c) Money allows the postponement of consumption.
(d) Money provides its holder with perfect liquidity.
The correct answer is (a) Money is a convenient means of measurement.
Q-40). Which of the following financial assets is not included in the M1 definition of
money?
(a) Currency in the vaults of Banks
(b) Demand deposits

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 Monetary and Financial System (MAFS)
(c) Money market mutual fund
(d) Both (a) and (c)
The correct answer is (d) Both (a) and (c).
Q-41). If cows serve as a medium of exchange, a unit of account, and a store of wealth,
cows are said to function as
(a) bank deposits.
(b) reserves.
(c) money.
(d) loanable funds.
The correct answer is (c) money.
Q-42). Which of the following is not included in the money aggregate M2?
(a) Currency outside Banks
(b) Demand Deposit of Banking System
(c) Time Deposit of Banking System
(d) None of the above.
The correct answer is (d) None of the above.
Q-43). Which one of the following is not a function of Money -
(a) A means of fund transfer
(b) A store of value
(c) A medium of exchange
(d) A unit of account
The correct answer is (a) A means of fund transfer.
Q-44). Which of the following is not included under M1?
(a) Time Deposit
(b) Euro Deposit
(c) Currency Kept in the vaults of Banks
(d) All of the above
The correct answer is (a) Time Deposit
Which of the following demand for money is influenced by rate of interest?
(a) Transaction demand for money
(b) Precautionary demand for money
(c) Speculative demand for money
(d) None of the above.
The correct answer is (c) Speculative demand for money.
Q-45). Banking system creates money to the extent of -
(a) excess reserves of the banking system
(b) reciprocal times of excess reserve

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 Monetary and Financial System (MAFS)
c) It is the total volume of money that is held by the general public of a country at a particular
point in time
d) All of the above-
The correct answer is c) It is the total volume of money that is held by the general public of a
country at a particular point in time
Q-130). A widely used monetary policy tool among the following is?
a) Open market operations
b) Issuing of notes
c) Close market operations
d) Fixation of Exchange rate
The correct answer is a) Open market operations
Q-131). Credit can be created by:
a) Central Bank
b) Grameen Banks
c) Commercial Banks
d) Investment Banks
The correct answer is c) Commercial Banks

Monetary and Financial System 96th Question Paper

Time-3 hours
Full marks-100 Pass marks-50
New Syllabus -June/2023
[N.B. The figures in the right margin indicate full marks. Answer any five questions.]
1.(a) How money supply is measured? (23pg) Compare and contrast MI and M2 money
supply. 26pg
(b) From the following information, measure the monetary aggregates of M1 and M2: 28pg
Items Value as of December 2022(Billion taka)
Currency in circulation 2923.60

Demand deposits 1837.40

Currency in tills of DMBS 241.80

Other checkable deposits 6.20

Time deposits 13054.30

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 Monetary and Financial System (MAFS)

Money market mutual fund 10.50

(c) Clarify 2 (two) determinants of money supply. (29pg) Can monetary authority/central bank
directly control money supply? Explain. 30pg

2.(a) Do you think the Bangladesh Bank is considered as supreme monetary and banking
authority? Discuss with its mandates under Bangladesh Bank Order, 1972. 163pg
(b) What is financial stability? How central bank acts as Lender of Last Resort (LOLR) to
maintain financial stability? 165pg

3. (a) Distinguish between 'debit card' and 'credit card'. (38pg) Describe pros and cons of
using a cheque as a payment method.(37pg)
(b) What is QR code? Recently Bangladesh Bank introduced an interoperable Bangla QR to
popularize payments for goods and services using various payment instruments, including
bank accounts, debit, credit or prepaid cards, MFS and e-wallet accounts. Do you think that
we are heading towards a cashless society in the near future? Give your opinion. 39pg
(c) If you use a credit card' to purchase goods or services on the internet, does this affect the
MI or M2 money supply or both or neither? Explain. 21 pg

4.(a) What are the constituents of monetary system? (32pg) Briefly discuss the commercial
banks role in the process of the money supply. (Hint: T-account or formula and reserve
requirement.] 31pg
(b) What constitutes the monetary base? How does the central bank control the monetary
base? 27pg

5.(a) What is a financial system? Which components constitute a financial system? 51pg
(b) Explain financial development in brief. How you can measure the financial development of
a country? Illustrate with 3 different methods. 58pg

6.(a) Using a supply and demand framework for bonds, show why interest rates are
procyclical (rising when the economy is expanding and falling during recessions). Show the
effect on interest rates when the risk of loss of bonds rise under the same framework. 111pg
(b) What is the discount yield for a five year bond that was purchased for Tk. 60 and has a
face value of Tk. 100. 120pg
(c) The average industry PE ratio for hotels similar to Shangri-La hotel Chain is 37. What is the
current price of Shangri-La's earnings per share (EPS) are projected to be Tk. 1-16?
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 Monetary and Financial System (MAFS)

7.(a) Explain how Banking Financial Institutions (BFIs) and Non-bank Financial Institutions
(NBFIs) serve as financial intermediaries. 66pg
(b) Outline the functions and growth of NBFIs in Bangladesh.65pg

8.(a) At the current state of globalization, every country is internationally connected. What do
you know about global integration of the financial market? 130pg
(b) What is the role of the foreign exchange market in the global financial market? 129pg
(c) Define 'balance on current account' and 'basic balance' in international balance of
payments. 132pg
(d) Which of the following transactions would increase a current deficit? 133pg
(i) An increase in foreign travels
(ii) More long term borrowing by government
(iii) A decrease in export
(iv) A decrease in import
(v) An increase in remittance abroad.

9.(a) Briefly explain the basic fundamentals of Shari'ah Law? List major principles that must be
followed while developing Shari'ah complaint products. 145pg
(b) List Shari'ah complaint Islamic banking products outlining Shari'ah principles. 146pg
(c) What do you know about Shari'ah governance in an Islamic financial institution? Outline
the key players and their role in a 'Shari'ah governance framework'. 154pg

10.Please write short notes on any five of following topics:

a) Monetary Policy Statement (MPS) 180pg
(b) Trust-cum-settlement Account 189pg
(c) Sustainable Finance 192pg
(d) Manage Float Exchange Rate System 187pg
(e) OTC market 123pg
(f) MRA 169pg
(g) Mobile Financial Service (MFS) 40pg
(h)E-money. 196pg

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