اتفاقية اعادة الشراء

Repurchase Convention

The repurchase convention (repo) is one of the most important means that banks resort to to manage the problem of cash liquidity (i.e., the need for cash liquidity or the presence of a surplus that needs investment). This can be accomplished via concluding a convention to sell securities (i.e., government debt securities) or any liquid assets. Then, on condition, the securities sold will be repurchased after an agreed-upon period with the same price in addition to an amount of money as interest calculated at a certain rate called (the repo rate). This thesis is concerned with studying this convention in terms of its definition, its pillars, and the most important functions performed by this convention. The study also focuses on distinguishing the repurchase convention from others. Then, it shows the adaptation of this agreement, and its verdict from the point of view of jurisprudence and law. This study concludes that this convention is illegal from the Islamic point of view because it is based on usury. Likewise, the study is concerned with presenting a set of alternative solutions. These alternatives perform the same functions as this agreement, which enable Islamic banks and other Islamic financial institutions to manage their cash flow. Among the alternatives dealt with in the study are securitization and reverse securitization according Shariah. The second alternative is investment agency, and finally mutual loans.