Iran Banking Institute Quarterly Studies in Banking Management and Islamic Banking 2588-3569 3 5 2017 11 22 The Formation of Tawarruq Security Alternative to Bonds for Fiscal Policy The Formation of Tawarruq Security Alternative to Bonds for Fiscal Policy 169 198 93359 FA Seyed Mohsen Sajjadi Faculty member, Mofid University 0000-0001-5012-3349 Mahdi Gholampoor M. A in Economics Journal Article 2017 09 14 With regard to the prohibition of Riba in Islam, it is important to find an alternative to bonds that would be effective for financing the government deficit. In this case securities based on loan contract have been introduced that are not a proper substitute for bonds because these securities are faced with restrictions to be investigated in this paper. The present research explains the formation of Tawarruq securities as a proper alternative to bonds in five steps, and by comparing different securities in Islamic countries comes to the conclusion that based on interest free financial instruments, Tawarruq securities can be suitable substitutes for bonds. Therefore, as it is legitimate and relevant to the real market, it is also a proper tool for fiscal policy.   With regard to the prohibition of Riba in Islam, it is important to find an alternative to bonds that would be effective for financing the government deficit. In this case securities based on loan contract have been introduced that are not a proper substitute for bonds because these securities are faced with restrictions to be investigated in this paper. The present research explains the formation of Tawarruq securities as a proper alternative to bonds in five steps, and by comparing different securities in Islamic countries comes to the conclusion that based on interest free financial instruments, Tawarruq securities can be suitable substitutes for bonds. Therefore, as it is legitimate and relevant to the real market, it is also a proper tool for fiscal policy.   https://jifb.ibi.ac.ir/article_93359_6b19ab0004f63275829386e30d880c6f.pdf