It can be easily seen from the different reports of the International organizations like IMF and World Bank that most of the Muslim countries are under developed and have a very low per capita income except the producer of natural resources. Majority of them are facing social and economic problems, low literacy rate with highly unskilled labor force. Most of the Muslim population in these countries are living under poverty, unemployment rate is very high, and health condition is very poor. Except few, most of them are dependent on their deprived agricultural sector. Their social and economic problems are a major constraint in the development of their economies. Academicians and experts are in view that policies which are implemented in these countries are not well suited to these economies. Especially they blame to the monetary policy which is generally implemented through the channel of interest rate. In their view, interest is not allowed and it is clearly mentioned in their holy book, Al‐Qur’an. Before going to deep in this area, it is better for us to discuss the objective of the monetary policy in conventional as well as in an Islamic economy.