The Ruling of Paper Money Usage: Analysis Based on the Evolution of Currency Development

Salmy Edawati Yaacob

Abstract


Efforts to regain and elevate the usage of gold dinar in Malaysia have created various polemics either from the legal viewpoint, economic transactions, and the position of currency law. Views from some quarters advocating gold dinar as the currency demanded in Islam have implications on the use of paper money today. Consequently, some gold dinar activist groups in Malaysia forbid the use of paper money due to the lack of gold backing. This has created confusion amongst the communities on the law of paper money usage. Thus, the aim of this study is to analyze the views of the Muslim scholars regarding the forbidden use of paper money and the Islamic point of view. This analysis is based on the various phases of world currency development beginning from the first phase (paper currency as a receipt of debt), the second phase (a means of payment/fulus), the third phase (paper money as gold value backed) and the fourth phase (paper money as a principal currency). This study is in the form of qualitative by using the library research approach. The result of this study shows that the use of paper money is permissible because currently paper money has become the world principal money and no longer as a receipt of debt. The Council of Islamic Fiqh Academy (Majlis Majmac al-Fiqhi al-Islami) 5th session held in 1402H/1982AD is also with a resolution that the use of paper money is permissible.

Full Text: PDF DOI: 10.5539/ass.v10n3p86

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Asian Social Science   ISSN 1911-2017 (Print)   ISSN 1911-2025 (Online)

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