The Ruling on the Paper Currency We Deal With in Our Present Day
Machine translationRead the Arabic original
Fatwa No. ( 18073 )
Q: A disagreement has arisen regarding the ruling on the paper currency we deal with in these days of ours. The subject of the disagreement is that paper currency is not treated like gold and silver in terms of zakah; that is, it is said that there is no zakah due on paper currency. The claimant cited that this view is found in the following schools of jurisprudence: al-Shafi'i , Malik , and Ahmad , and he cited the attached documents as evidence for this letter. Since zakah is one of the five fundamental pillars of Islam, I request that this matter be clarified in some detail, along with the ruling and the evidence from the sources of Islamic law. I also request a reply by letter clarifying this, as I am currently in the United States of America.
A: The Council of Senior Scholars in the Kingdom has previously studied this matter and issued its decision, number (10), the summary of which is as follows: Based on the fact that currency is anything that is generally accepted, by custom or convention, as a medium of exchange, as indicated by Shaykh al-Islam Ibn Taymiyyah , who said: “As for the dirham and the dinar, no natural or legal limit is known for them; rather, their reference is to custom and convention. This is because, in their origin, the intended purpose is not attached to them, but the aim is for them to be a standard for what people trade with. Dirhams and dinars are not
intended for themselves, but they are a means to trade with them, which is why they are considered prices – until he said – the pure means to which no purpose is attached, neither by its material nor its form, achieves the intended purpose in whatever form it takes) end of quote. (Volume 29, page 251 of the Majmu' al-Fatawa). He mentioned something similar to this Imam Malik in (al-Mudawwanah) in the Book of Currency Exchange, where he said: “If people were to permit skins among themselves until they had a mint mark and a specific form, I would dislike them being sold for gold and silver on credit) end of quote. And since paper money is generally accepted in circulation, and it possesses the characteristics of currency, being a measure of value, a store of wealth, and a means of general discharge of debt, and since it became clear from the discussion with His Excellency the Governor that the characteristic of being a note is not intended, and reality testifies to and confirms this, as it also became clear that the backing does not have to cover all paper money, but it is permissible, according to the custom of issuing authorities, for it to be part of its currency without backing, and that the backing does not have to be gold, but it is permissible for it to be from several things, such as gold and strong paper currencies, and that silver is not a full or partial backing for any currency in the world. It also became clear that the factors of paper money – in strength and weakness – are derived from the economic state of its government; it strengthens with the strength of its state and weakens with its weakness, and local raw materials, such as oil and cotton
and wool, have not been considered, until now, by any of the issuing authorities as backing for paper currencies, and since the statement that absolute currency is the operative cause of riba occurring in the two metals is the most evident in evidence, and the closest to the objectives of the Shari'ah, and it is one of the narrations from the Imams Malik and Abu Hanifah and Ahmad , Abu Bakr said: A group narrated this from Ahmad , as it is the choice of some of the precise scholars among the people of knowledge, such as Shaykh al-Islam Ibn Taymiyyah , and his student Ibn al-Qayyim and others. And since currency is clearly realized in paper money for all of these reasons, the Council of Senior Scholars has decided, by majority, that paper money is considered currency in its own right, just as currency is realized in gold and silver and other prices, and that they are types that multiply with the multiplication of issuing authorities, meaning: that Saudi paper money is a type, and American paper money is a type, and so on, every paper currency is an independent type in itself, and that the following legal rulings result from this: First: The occurrence of riba in both its types in it, just as riba in both its types occurs in the two metals: gold and silver, and in other prices such as the fulus, and this necessitates the following: 1- It is not permissible to sell some of it for some of it, or for other types of currency such as gold or silver or others, on credit, absolutely,
so it is not permissible, for example, to sell the American dollar for five Saudi riyals or less or more on credit. 2- It is not permissible to sell some of the same type for some of it with a difference, whether that is on credit or hand-to-hand, so it is not permissible, for example, to sell ten Saudi paper riyals for eleven Saudi paper riyals. 3- It is permissible to sell some of it for some of it of a different type absolutely, if that is hand-to-hand, so it is permissible to sell the Syrian or Lebanese pound for a Saudi riyal, whether paper or silver, or less than that or more, and to sell the American dollar for three Saudi riyals or less or more, if that is hand-to-hand, and similar to this in permissibility is selling the Saudi silver riyal for three Saudi paper riyals or less or more, hand-to-hand; because that is considered selling a type for a different type, and there is no effect to mere sharing in name with a difference in reality. Second: The obligation of its zakah if its value reaches the minimum of the two thresholds of gold or silver, or if it completes the threshold with other prices and goods prepared for trade, if it is owned by those upon whom it is obligatory.
Third: The permissibility of making it capital in salam and partnerships. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad and his family and his Companions.
Q: A disagreement has arisen regarding the ruling on the paper currency we deal with in these days of ours. The subject of the disagreement is that paper currency is not treated like gold and silver in terms of zakah; that is, it is said that there is no zakah due on paper currency. The claimant cited that this view is found in the following schools of jurisprudence: al-Shafi'i , Malik , and Ahmad , and he cited the attached documents as evidence for this letter. Since zakah is one of the five fundamental pillars of Islam, I request that this matter be clarified in some detail, along with the ruling and the evidence from the sources of Islamic law. I also request a reply by letter clarifying this, as I am currently in the United States of America.
A: The Council of Senior Scholars in the Kingdom has previously studied this matter and issued its decision, number (10), the summary of which is as follows: Based on the fact that currency is anything that is generally accepted, by custom or convention, as a medium of exchange, as indicated by Shaykh al-Islam Ibn Taymiyyah , who said: “As for the dirham and the dinar, no natural or legal limit is known for them; rather, their reference is to custom and convention. This is because, in their origin, the intended purpose is not attached to them, but the aim is for them to be a standard for what people trade with. Dirhams and dinars are not
intended for themselves, but they are a means to trade with them, which is why they are considered prices – until he said – the pure means to which no purpose is attached, neither by its material nor its form, achieves the intended purpose in whatever form it takes) end of quote. (Volume 29, page 251 of the Majmu' al-Fatawa). He mentioned something similar to this Imam Malik in (al-Mudawwanah) in the Book of Currency Exchange, where he said: “If people were to permit skins among themselves until they had a mint mark and a specific form, I would dislike them being sold for gold and silver on credit) end of quote. And since paper money is generally accepted in circulation, and it possesses the characteristics of currency, being a measure of value, a store of wealth, and a means of general discharge of debt, and since it became clear from the discussion with His Excellency the Governor that the characteristic of being a note is not intended, and reality testifies to and confirms this, as it also became clear that the backing does not have to cover all paper money, but it is permissible, according to the custom of issuing authorities, for it to be part of its currency without backing, and that the backing does not have to be gold, but it is permissible for it to be from several things, such as gold and strong paper currencies, and that silver is not a full or partial backing for any currency in the world. It also became clear that the factors of paper money – in strength and weakness – are derived from the economic state of its government; it strengthens with the strength of its state and weakens with its weakness, and local raw materials, such as oil and cotton
and wool, have not been considered, until now, by any of the issuing authorities as backing for paper currencies, and since the statement that absolute currency is the operative cause of riba occurring in the two metals is the most evident in evidence, and the closest to the objectives of the Shari'ah, and it is one of the narrations from the Imams Malik and Abu Hanifah and Ahmad , Abu Bakr said: A group narrated this from Ahmad , as it is the choice of some of the precise scholars among the people of knowledge, such as Shaykh al-Islam Ibn Taymiyyah , and his student Ibn al-Qayyim and others. And since currency is clearly realized in paper money for all of these reasons, the Council of Senior Scholars has decided, by majority, that paper money is considered currency in its own right, just as currency is realized in gold and silver and other prices, and that they are types that multiply with the multiplication of issuing authorities, meaning: that Saudi paper money is a type, and American paper money is a type, and so on, every paper currency is an independent type in itself, and that the following legal rulings result from this: First: The occurrence of riba in both its types in it, just as riba in both its types occurs in the two metals: gold and silver, and in other prices such as the fulus, and this necessitates the following: 1- It is not permissible to sell some of it for some of it, or for other types of currency such as gold or silver or others, on credit, absolutely,
so it is not permissible, for example, to sell the American dollar for five Saudi riyals or less or more on credit. 2- It is not permissible to sell some of the same type for some of it with a difference, whether that is on credit or hand-to-hand, so it is not permissible, for example, to sell ten Saudi paper riyals for eleven Saudi paper riyals. 3- It is permissible to sell some of it for some of it of a different type absolutely, if that is hand-to-hand, so it is permissible to sell the Syrian or Lebanese pound for a Saudi riyal, whether paper or silver, or less than that or more, and to sell the American dollar for three Saudi riyals or less or more, if that is hand-to-hand, and similar to this in permissibility is selling the Saudi silver riyal for three Saudi paper riyals or less or more, hand-to-hand; because that is considered selling a type for a different type, and there is no effect to mere sharing in name with a difference in reality. Second: The obligation of its zakah if its value reaches the minimum of the two thresholds of gold or silver, or if it completes the threshold with other prices and goods prepared for trade, if it is owned by those upon whom it is obligatory.
Third: The permissibility of making it capital in salam and partnerships. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad and his family and his Companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.