Riyadh, Asharq Al-Awsat – The Islamic nation in all its stages has suffered under the weight of usury until recently since it had no other choice but to deal with the products of colonialism. Usury is a tool that was employed [by the occupational forces] to rob the nation of its resources and weaken its economy whilst creating a constant dependence on the capitalist system.
This was the case until a group of Muslims got together and with faith in the validity of Islamic Shariah and its suitability for situations regardless of time and place, took the responsibility upon themselves to find an alternative to the usury-reliant institutions. And thus, the Islamic banking system emerged and in the span of 30 years, such institutions recorded one success after the other and penetrated markets that had previously been impregnable.
And yet, there were some who viewed in this victory a defeat and attempted to sabotage the experiment. Under an economic pretext, they meticulously examined sources to find evidence to challenge and invalidate the legitimacy of Islamic banking – but came out empty-handed. All what they could argue, theoretically speaking, was that usury does not apply to paper currency because it cannot be valued against gold and silver.
Such people justified their claims by drawing on archaic and contemporary sources, in addition to some clerical opinions and the provisions of the monetary system – all of which were obsolete and could not be relied upon in this day and age. Meanwhile, prominent scholars and clerics have stated that paper currency could be valued against gold and silver.
According to the former Grand Mufti of Saudi Arabia, the late Sheikh Abdulaziz Bin Baz, “It is common knowledge among contemporary scholars that banknotes are valued against gold and silver [currency] since it [paper currency] gives commodities value and prices.”
In his book ‘Fiqh al Zakah’ (The Jurisprudence of Zakah) Sheikh Yusuf al Qaradawi says, “Perhaps the dispute over banknotes [paper currency] was valid when they were first used and when the public did not trust them, which is understandable; however the situation is very different now. These banknotes are now capable of achieving what metal currency [can accomplish] and the society views [this fact] as such. [Paper currency] is paid as a dowry and is legitimately recognized by Shariah without any objections. It is paid for the price of commodities and transfers ownership free of any disputes. It is paid as wages for human labor and no worker or employee should be exempt from receiving it in return for his/her work. It is also paid as blood money to compensate accidental manslaughter and other cases; it [this money] exonerates the killer and appeases the victim’s family. It is also stolen and the punishment incurred by thieves is undisputed without exceptions. All this indicates that [paper currency] has legitimate monetary functions.”
Moreover, a decision was issued by the Islamic Fiqh Academy (IFA) recently that stated that paper currency is valid in its own right and that it is backed by silver and gold and that Zakat [almsgiving] must be paid on it. Furthermore, paper currency is susceptible to usury [there are some who maintain that the prohibition of usury does not apply to banknotes] same as it applies to gold and silver based on the fact that paper currency is valued against them. As such, paper currency takes on all the provisions which in turn grant it its legitimacy.
As for what Sheikh al Saadi has reportedly said, that usury is not applicable to paper currency, Sheikh Mohammed Bin Uthaymeen was right to refute this by saying, “Our Sheikh, the late Abdul Rahman al Saadi, had pronounced it permissible (to equate between paper currency and metal currency). In fact; he had permitted more than that: He believes that it is allowed [by Shariah] to postpone payment [of a loan] as long as no particular time is specified [as a deadline]. If I give you one hundred and you give me back one hundred or more, then that is permissible so long as you do not specify a time [for repayment]. If you say I will pay your one hundred back with a hundred and ten in a year – that is prohibited according to Sheikh Abdul Rahman.”
The truth is anyone who is neutral will see that those who adopt positions against Islamic banking do so out of personal misgivings against it as we have mentioned, not based sound scientific basis.
* Lahem al Nasser is an Islamic banking adviser.