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Fiat money: from the current Islamic finance scholars’ perspective

Fiat money: from the current Islamic finance scholars’ perspective PurposeThis paper aims to discuss the opinions of current Shariah scholars on the concept of debt money in the present-day fiat money system.Design/methodology/approachResearch design of this paper is a quantitative investigation of Shariah experts by distributing a questionnaire to them. As majority of Shariah scholars are also Shariah advisory of the current banking system, it is important to find out their level of knowledge on the issue of debt money created by the commercial banking system through the fractional-reserve banking (FRB) system.FindingsBased on this investigation, most Shariah scholars are unaware of and confused about the mechanics underpinning the creation of money, especially with respect to FRB as it is practiced by the conventional and Islamic banking systems.Originality/valueBased on this research, it is recommended that these scholars should improve their understanding of the operation of the fiat money system and its consequences. It is recommended that, in future, Shariah scholars should think “outside of the box” by creating Islamic financial instruments that do not resemble those of the conventional system. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Humanomics Emerald Publishing

Fiat money: from the current Islamic finance scholars’ perspective

Humanomics , Volume 33 (3): 26 – Aug 14, 2017

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0828-8666
DOI
10.1108/H-01-2017-0013
Publisher site
See Article on Publisher Site

Abstract

PurposeThis paper aims to discuss the opinions of current Shariah scholars on the concept of debt money in the present-day fiat money system.Design/methodology/approachResearch design of this paper is a quantitative investigation of Shariah experts by distributing a questionnaire to them. As majority of Shariah scholars are also Shariah advisory of the current banking system, it is important to find out their level of knowledge on the issue of debt money created by the commercial banking system through the fractional-reserve banking (FRB) system.FindingsBased on this investigation, most Shariah scholars are unaware of and confused about the mechanics underpinning the creation of money, especially with respect to FRB as it is practiced by the conventional and Islamic banking systems.Originality/valueBased on this research, it is recommended that these scholars should improve their understanding of the operation of the fiat money system and its consequences. It is recommended that, in future, Shariah scholars should think “outside of the box” by creating Islamic financial instruments that do not resemble those of the conventional system.

Journal

HumanomicsEmerald Publishing

Published: Aug 14, 2017

References