Does riba (usury or interest) apply to paper currency?
Machine translationRead the Arabic original
The questioner : But now they see that it is not used as a substitute. I mean, from the beginning, they used it as a substitute. Now you know that this eight-unit piece can be used to buy things like riyals and others. But it does not stand for gold or silver. Does riba apply to it?
The Shaykh : It appears that riba applies to it, even if its value has decreased.
The questioner : Even if it no longer has value in gold and silver.
The Shaykh : It originally has value.
The questioner : Originally, it was not abolished.
The Shaykh : No, it was not abolished, but it became obsolete, and the value of gold and silver rose. For this reason, like the riyal that was originally valued at one Saudi silver riyal, it now does not equal even a quarter of a riyal because their value has dropped. Yes, that is correct.
The questioner : So what remains is the ruling. Why?
The Shaykh : What we hold is that riba al-nasi'ah (usury of deferment) applies to this currency only; riba al-nasi'ah applies to it only, without riba al-fadl (usury of excess in a like-for-like exchange).
The questioner : Even if it is of the same type.
The Shaykh : Even if it is of the same type, even if the difference is that this one is new and this one has some wear, for example, it is all paper.
The questioner : The wisdom in permitting riba al-fadl in paper currency. Even though we know or hear that no country issues any paper currency without covering its value with gold.
The Shaykh : This coverage is not real. For this reason, if you go now to the countries that covered it with gold and say, "This is paper currency covered by so much and so much gold, give it to me, give me the gold without the paper," they will push you against your chest until you fall on your back. So if the matter is merely a restrictive one and not a real one.
The questioner : I mean, if one hundred riyals are exchanged for one hundred and fifty, is it permissible?
The Shaykh : There is nothing wrong with it, but note that it must be hand-to-hand; there must be no deferment.
The questioner : Even if both are new, there is no difference between them.
The Shaykh : It appears that riba applies to it, even if its value has decreased.
The questioner : Even if it no longer has value in gold and silver.
The Shaykh : It originally has value.
The questioner : Originally, it was not abolished.
The Shaykh : No, it was not abolished, but it became obsolete, and the value of gold and silver rose. For this reason, like the riyal that was originally valued at one Saudi silver riyal, it now does not equal even a quarter of a riyal because their value has dropped. Yes, that is correct.
The questioner : So what remains is the ruling. Why?
The Shaykh : What we hold is that riba al-nasi'ah (usury of deferment) applies to this currency only; riba al-nasi'ah applies to it only, without riba al-fadl (usury of excess in a like-for-like exchange).
The questioner : Even if it is of the same type.
The Shaykh : Even if it is of the same type, even if the difference is that this one is new and this one has some wear, for example, it is all paper.
The questioner : The wisdom in permitting riba al-fadl in paper currency. Even though we know or hear that no country issues any paper currency without covering its value with gold.
The Shaykh : This coverage is not real. For this reason, if you go now to the countries that covered it with gold and say, "This is paper currency covered by so much and so much gold, give it to me, give me the gold without the paper," they will push you against your chest until you fall on your back. So if the matter is merely a restrictive one and not a real one.
The questioner : I mean, if one hundred riyals are exchanged for one hundred and fifty, is it permissible?
The Shaykh : There is nothing wrong with it, but note that it must be hand-to-hand; there must be no deferment.
The questioner : Even if both are new, there is no difference between them.
Source
قناة «فضيلة الشيخ محمد بن صالح العثيمين»، 2419 - 4600 هل يجري الربا في الأوراق النقدية؟ ابن عثيمين — youtube.com
The Arabic text is a machine transcription of the audio recording.