Can Sukuk Support Sustainable Development through Monetary Policy Transmission?

Currently, the Islamic financial sector has become a global concern because it has potential in the development of a country. One of the products in this sector in the Islamic capital market is Sukuk. The purpose of this study is to analyze the influence of Sukuk on inflation and economic growth in Indonesia through monetary policy transmission. The analytical method used is a cointegration approach to analyze the relationship between the balance of sukuk, inflation and economic growth in the short and long term. The research variables used are the monetary transmission of asset price channel, namely Sukuk, consumption, inflation, interest rate, economic growth, and the composite stock price index. The results showed that in the short term, Sukuk does not have a balance relationship and influence on inflation, but sukuk has a balance and influence relationship on economic growth and composite stock price index through the channel of asset prices. This indicates that it is important for the relevant Indonesian authorities to improve the development of the Islamic capital market especially Sukuk to support sustainable development, because capital financing for companies and financing of fiscal deficits for the government can be obtained from its own population, accordingly that Indonesia's dependence on foreign debt can be reduced and the development process continues. Keywords— Sukuk; Monetary Policy Transmission; Inflation; Economic Growth