Part I: Seigniorage of fiat money and the maqasid al-Shari’ah: the unattainableness of the maqasid
Ahamed Kameel Mydin Meera
Purpose – To reason whether the interest-based fiat monetary system is compatible with the objectives of the Islamic law or the Shariah. Design/methodology/approach – This is a theoretical paper that uses the quantity theory of money and the objectives or maqasid al-Shariah as expounded by scholars as basis for logical deductions therefrom. Findings – The socio-economic implications of fiat monetary system imply that the maqasid al-Shariah cannot be attained. Indeed, the system is likely to cause a move away from the maqasid. Research limitations/implications – The paper is based primarily on theoretical deductions. Further empirical investigation would shed further light. Practical implications – Practical implications are numerous. The definition of what is money is then crucial to address the socio-economic implications caused by the fiat monetary system. For Islamic economics, this would imply that the process of Islamization of knowledge/disciplines is futile without addressing this issue first. Accordingly, the establishment of Islamic economics, banking and finance warrants a serious look into the current definition of money and monetary systems. Originality/value – It calls for a definition of Shariah-compatible money. This is beneficial to the researchers, proponents and practitioners of Islamic economics, banking and finance.
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