Fiat money: from the current Islamic finance scholars’ perspective

Jaffar, Syammon; Abdullah, Adam; Meera, Ahamed Kameel Mydin

doi:10.1108/h-01-2017-0013

Cited by 7 publications

(3 citation statements)

References 14 publications

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“…They believe that money is actually a traded commodity that adheres to the law of value (Brollo, 2021;Vojvodić Balaž, 2019). In addition, they view money as a commodity, whose value is determined by how it is traded in the market (Jaffar et al, 2017). Money has taken over as the main factor in economic activity, and it has played a role in increasing public consumption.…”

Section: Discussionmentioning

confidence: 99%

Islamic Paradigm of Money: Interconnected Dimensions

et al. 2021

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In Islam, money is viewed as a means to measure value and a tool for transactions. This study explains other dimensions of money while also examining its use in the interconnected social and religious phases of human life. Since money is perceived differently across cultures, we conducted a literature review to identify dimensions other than the one considered by Western culture. For this purpose, we used scientific articles, book chapters, and books as the primary sources, which allowed us to obtain a complete and coherent description of the phenomenon under study. According to the results, money not only has a transactional dimension that seeks to maximize profit (as it is mainly conceived by Western culture) but also a social and religious dimension. Giving money can be more satisfying than giving in-kind. In Islam, the money collected is freely spent based on individual needs. In addition, money (dinar and dirham) serves to measure pious deeds when employed as a unit of account in zakat and qurban, as well as in inheritances. In Islam, a proper management of monetary assets can help to link the social and religious dimensions in a coherent manner.

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Section: Discussionmentioning

confidence: 99%

Islamic Paradigm of Money: Interconnected Dimensions

et al. 2021

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“…Many kinds of literature have recently been increased on the position of commodity money and fiat money in the context of Islamic financial theories. (Jaffar et al, 2017;Rama, 2013;Rab, 2020: Aizezi, 2010. While traditional fiat currency plays a vital role in the socioeconomy and controls the financial market, the advent of the information age extends to digital currency known as the cryptocurrency of blockchain technology.…”

Section: Introductionmentioning

confidence: 99%

Towards an Interpretation of Cryptocurrency as a Commodity From Maqasid Al-Shari’ah Perspective

Akbar

2022

Int. J. Is. Ec. Fi. Res.

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From days of simple barter to the age of digital entries, the evolution of money is proof of a human sense of resourcefulness. Besides the universal acceptance of money as wealth, conventionally it is regarded as a commodity and according to Islamic jurisprudence, though money is used as a medium of exchange and store of value, it cannot be sold at a price higher than its face value or rented out. There has recently been increasing work on the position of commodity money and fiat money in the context of Islamic finance theories and commodity markets. Whereas traditional fiat currency plays a vital role in the socio-economy, digital or cryptocurrency starts to persuade the world economy under the ledger technology. Unlike fiat money, the cryptocurrency spectrum today, under its extreme configuration, intends to offer remarkable opportunities. The conventional works that have provided several studies on the impacts of cryptocurrency in the financial services industry and commodity markets, proportionate to the analysis of the classification of wealth pertaining to digital currencies in order to review the relationship between crypto-token and crypto-commodity. There have been few responses from the Islamic perspective, but not particularly in the light of Maqāsid. Therefore, the paper explores the nature of wealth and the principles involved in the acquisition and protection, and classification of wealth according to Maqāsid al-Shari’ah. With particular reference to a treatise of Maqāsid, the paper investigates five simultaneous characteristics and objectives of wealth deliberated by Ibn Ashur (2001). The last part of the paper analyzes the relationship between the five characteristics of wealth and the cryptocurrency ecosystem, such as tokens, initial coin offerings (ICOs), and cryptocurrency derivatives, to review the research opportunities to propose a more comprehensively sound study in the Maqasid framework.

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“…Jaffar et al (2017) in their work titled “Fiat money: From the current Islamic finance scholars’ perspective,” explain the evolution of medium of exchange from barter to gold standard to paper gold certificate and finally, to the debt-based money creation mechanism of fractional reserve banking in the fiat currency system. They provide a comprehensive literature review of the problems of fiat currency: Fiat currency system is profitable in initial stages.…”

Section: Introductionmentioning

confidence: 99%

Exploring novel Islamic monetary system

Gündoğdu

2020

JIABR

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Purpose The purpose of this paper is to explore an alternative Islamic monetary system in which money is created from supply chain grassroots based on work effort and is accessible to people as long as they offer goods and services demanded by others. Design/methodology/approach This study adopts the critical realism approach and highlights the challenges with the present monetary system. It also proposes to address these challenges through an alternative monetary system in which money creation starts from the grassroots of the supply chain. The proposed system extends the real-world complementary currency concept of barter to a holistic electronic trading platform, which includes chain barter alternatives, licensed warehouses and electronic warehouse receipts within the Islamic microfinance practice, thereby facilitating cross-border trade and international trade payments. An electronic currency, valued at the worth of goods produced in the supply chain, is introduced as the medium of exchange. Findings The problem with past monetary systems can be addressed through current information technology and supply chain management to enable a monetary system and money creation based on real economic transactions. Originality/value This study proposes an alternative monetary system, which is only possible by harnessing supply chain management with money creation. The proposed monetary system may be considered, should the present system fail or need to be improved.

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Fiat money: from the current Islamic finance scholars’ perspective

Cited by 7 publications

References 14 publications

Islamic Paradigm of Money: Interconnected Dimensions

Islamic Paradigm of Money: Interconnected Dimensions

Towards an Interpretation of Cryptocurrency as a Commodity From Maqasid Al-Shari’ah Perspective

Exploring novel Islamic monetary system

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