New practice recommendations on the management of required provisions and liquidity of participation banks in the context of macroeconomic indicators

The reasons for the establishment of participation banks make these banks different from traditional banking methods and form the basis of their originality. The banking systems of the countries in which participation banks operate mostly have a dual appearance. Central banks establish an intense relationship with the players in this system within the framework of their duties and responsibilities. In the dual banking system, there is no central bank understanding for fully observing the principles of participation banking. This situation leads to the violation of participation banking principles in some practices between participation banks and central banks. The relations between the participation banks operating in Turkey and the Central Bank of Turkey Republic (CBTR) contain many problems. Among these problems there are issues such as exposure of participation banks to an interest-based process in line with the CBTR's required reserve application, implementation of the repo application that is implemented within the framework of open market operations (OMO) within the scope of the controversial sell-rebuy (Bey'ul-Îne) application, providing a limited number of products and services to participation banks compared to traditional banks in API and ready-made facility applications. The picture that emerges in the sum of these problems is that the CBTR does not have a system suitable for the participation banking infrastructure. The main purpose of the study is to shape the transactions between the participation banks operating in Turkey and the CBTR on the basis of participation banking principles through the new application proposals and to analyse the possible effects of these proposals on monetary policy, corporate identity policies and macroeconomic variables. Within the framework of application suggestions; first of all, it was proposed to establish a system based on the interest-free window system in order to create an infrastructure suitable for the participation banking system at the CBTR. Then, new application proposals for required reserve transactions and money and capital market transactions are included under the umbrella of this organization. Keywords: Interest Free Finance, Interest Free Banking, Participation Banking, Central Banking, Macro Economy.