From Metal to Paper: Validating Paper Money from Islamic Perspective

Abstract

Money plays an indispensable role in vitalizing economic activities of a country. This occurs
not merely through facilitating exchange but also through serving as a basic survival tool as
unit of account and store of value. After undergoing experimentation and customary use of
various objects as money (such as sea shells, gold, silver, stones, tobacco, etc.) the world has
finally settled down by embracing paper money as official medium of exchange. Paper
money also endured through many financial crises and initial oppositions to its premise. From
an Islamic standpoint, paper money poses certain flaws and limitations that can make it
unacceptable from legal perspectives. This paper underlines such flaws, points of objections,
corollaries and counter-points, and ends with a thematic discussion on the way forward for
Muslim nations with respect to various political and regulatory implications for
implementations of potential paper money alternatives.

Jel Classifications: B30, E42.

Keywords: Shari’ah; Paper money; Bimetallism; Currency; Murabitun movement; Africa.

 

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