Is currency exchange with a difference in value permissible as long as the types differ and it is no longer as it was previously, when they relied on gold and silver for exchange?

The questioner : And in it, there is also an important matter that many people need, which is the issue of currency exchange, our Shaykh.

The Shaykh : Yes.

The questioner : So we mean, we know that it is not permissible if there is a difference, and it falls under riba al-fadl (usury of excess in a like-for-like exchange), yes. The Messenger of Allah (peace and blessings be upon him) prohibited and the other types except like for like. Now we hear that the currency reserve has become one of the wealths, for example, if the land has oil, oil, or agriculture, or something similar. So does this ruling become void or change to become permissible, exchanging currency with a difference and profit, because the types have become different? If the two types differ, sell however you wish.

The Shaykh : Excuse me, I did not understand. What is the connection of oil to the subject?

The questioner : They say now that the cash currency reserve that is in the hands of people is no longer gold and silver, but has become the country's wealth from agriculture, oil, and minerals. So based on that, this currency, meaning, is no longer of gold and silver such that it is not permissible to sell it except like for like, but rather the types have become different. For example, the Syrian currency relies on agriculture, the Jordanian currency, for example, on industry, Saudi Arabia on oil. This enters into the completion of the hadith . So what is your opinion, especially regarding the matter of exchange, which is not without profit? Meaning, an exchanger does not open a shop unless, for example, the Jordanian dinar equals, for example, one hundred Syrian pounds, and he profits from his work and effort, dedicating himself to it, and the sellers differ in that. So what do you see in this matter?

The Shaykh : Okay, I see, before anything else, is this speech sound and correct? Does any currency in the world stand on oil or something like that, and not stand on gold currency?

The questioner : Valuation is one thing, and reserves are another. Meaning, one might say this equals so many grams of gold, but what is actually in the central bank treasury opposite it? Now there is gold, there is silver, and there are the other wealths, as I said, the country is no longer of this one type.

The Shaykh : Yes, so when the individuals of the people want to exchange paper currency, what do they exchange it for? For oil? For industry? For...

The questioner : No, by strength, meaning, it can be in every country according to...

The Shaykh : What is this strength? The strength in your speech is an undefined, incomprehensible thing.

The questioner : Yes, it is variable.
The Shaykh: What is the strength here? What is the strength in Syria? What is the strength in the rest of the countries of the world regarding paper currency? One person wants to exchange paper currency and buy with it gold, he does not buy with it oil, he buys with it anything, because this is the reserve for the general public. This matter is a governmental and international issue. But as for the individuals of the people, this paper is opposite gold. Even silver now has no value.

The questioner : Yes, you are correct.

The Shaykh : But the real and practical value is gold.

The questioner : No, if we observe a matter, which is that these paper currencies have no value in themselves, they are printed; a forger can print millions of them, so they have no value, no value, except by what is opposite them in the state treasury. The state treasury now has some gold and some of these other wealths that it has placed its hand on. So the value of this currency is from this reserve, meaning, its value is not that, by Allah, people calculate in the account that this equals so much gold.

The Shaykh : Okay, now a question arises here, and I think you know well: does any state, according to general international custom, have the right to print paper currency based on its economy, even if it is poor in gold? Does it have that right?

The questioner : They print, but the currency depreciates.

The Shaykh : You did not answer me. You did not answer me.

The questioner : Yes, of course, there is international supervision over...

The Shaykh : You did not answer me, my brother. Tell me yes or no.

The questioner : I say it does not have it, as you sometimes say.

The Shaykh : No, no. Is there a state that can print as much paper currency as it wishes and does not have a treasury of gold? Say yes, say no.

The questioner : Yes, they do this in Syria. That is what caused the depreciation.

The Shaykh : My brother, they do... Look, this is a deviation from the question. Is there an internationally recognized system that might do what is condemned religiously, let alone internationally? I am asking now: is there a general law in general international custom that allows any state to print paper currency even if it has no gold? Is this recognized?

The questioner : An international law prevents that, and violations occur.

The Shaykh : But my brother, I am telling you, violations. Why are you repeating the speech to waste your time? I am saying that if there is a state that does not have abundant gold, is there an internationally recognized law that it is permissible for it to print as much as it wishes and it has no gold?

The questioner : No.

The Shaykh : By... I am admitting to you, they may do contrary to the law. Now America, all of it, in its dealings, is contrary to international law. What did it bring to Somalia, for example, to the end of it? - No, thank you - We are deciding as an internationally recognized system, whether it is applied or not, that is a second research.
If the matter is as you know, which is that there is no system that allows any state to print paper currency unless it has gold, then the real reserve is not the economy that differs from country to country, as you mentioned just now, but rather it is gold. And what confirms this for you is a second question, which is a complement to the first question: if a state owns half of what the other state has of the gold reserve, is it legally valid for both states to print an equal proportion of paper notes, and not print according to what they have of the gold reserve? Is that not so?

The questioner : Yes, but...

The Shaykh : If the truth is not the economy, the economy is tied to gold, so gold is the basis. And therefore, this speech that you spoke, and which many of these economic writers say, whose aim is to smooth out reality for the most trivial reasons and the weakest evidence, and they do not know the Shari'ah (Islamic sacred law) nor do they study it. This general international legal custom that led them to the degree that it is not permissible for any state to print paper currency except in proportion to what is in its treasury of gold. If this is the real reserve, and the economy rises and falls according to what is in the treasury of gold, and not oil, and not industry, as I said for some countries.
In summary, now, as for the individuals of the Muslims, what do they do with these papers if they want to prepare for the future? Do they buy with them oil, or industry, or clothes, or anything, and do not store gold? And this is a practical custom and an acknowledgment, not only international but also by individuals, that the value is in these papers and their reserve of gold, otherwise it would go to waste. Take, for example, what happened in the time of the World War when the so-called Allies won over Germany. What happened to the German mark? It went to waste. You stuffed a room, perhaps full of German marks, and it had no value left. Why? Because it became poor; it no longer had the gold reserve, because the Allies seized everything that was there. So I think that this is a delusion in reality when it is said that these papers have their reserve in oil, in the economy. No, this speech is not correct. Rather, the reserve is gold. And the stronger the state is in its gold, the stronger its currency is, and vice versa. And the contemporary reality today, as you know, is the greatest proof of that. In conclusion, I do not see any effect for this opinion at all, and the matter remains as we know from before: "It is not permissible to exchange except like for like, otherwise it is riba (usury or interest)."