CLCs (Central Lending Certificates)

Definition of "CLCs (Central Lending Certificates)"

One of the proposed tools of monetary policy of the Islamic economy. The central bank may issue CLCs which carry no return, but are guaranteed to be paid on maturity. This would be a medium for the public to extend their funds as qard hasan to the government with altruistic motives. Proceeds of CLCs may be made available to member banks, which would lend them to borrowers after proper assessment of future income and application of social criteria if rationing is required.