Is trading in paper currency and commercial shares permissible?

The questioner : Is trading by buying currency, like money changers and the like, lawful or forbidden? And what about the shares of companies in the Amman financial market?
The questioner: The financial market?

The Shaykh : We do not see trading in paper currency or commercial shares as permissible... The reason for this, regarding paper currency, is that paper currency, as we all know, has no intrinsic value. By intrinsic value, I mean that any material thing in this world has value, even if that value varies between the value of a piece of iron, a piece of nickel, a piece of aluminum, and likewise copper, silver, and gold. All these metals have intrinsic value, whether little or much. A white sheet of paper that can be used for writing also has intrinsic value, and then its value varies according to its thickness, durability, weight, and so on. But paper currency has no intrinsic value, not even in terms of its utility for writing on it. Rather, its value is conventional. You see, for example, these paper currencies may be very close in size and measurement, but they vary greatly in value. A smaller piece of paper may be more valuable, and so on. Where do these values come from? Where does this variation come from? It comes from the recognition of the state that printed this currency and issued it for transaction in the whole world. The origin of these currencies, when the one who invented them did so to facilitate transactions due to their lightness, was that they established a gold reserve for them. Each piece of paper had a specific value in gold in the bank of that state. And it was possible at that time, truly, for the ease and availability of gold in the state's treasury, that if a person wanted to exchange gold for paper, it was facilitated for him. So the value of these currencies is tied to the amount of gold hidden in the state's treasury that was allocated to them. When a person takes a real example today, the Jordanian dinar equals three Iraqi dinars today. Before the Iraqi war, the Iraqi dinar was more valuable than the Jordanian dinar. Now the situation is completely reversed with a large difference. So when the trader in currency buys, previously he would buy one Iraqi dinar for one Jordanian dinar plus something. Now he buys three Iraqi dinars for one Jordanian dinar. Is he buying paper with paper? The answer is no, because this paper has no value. So what is he buying? He is buying the value assigned to these currencies. But we see that this value goes down and up, decreases and rises, and so on. So the nature of the paper is not what goes up and down, but what goes up and down is related, as is known to everyone, to the economic aspects of the state where the paper or currency of these currencies exists. So these currencies have become, first of all, like gambling: your luck and your share. Therefore, trading in them is not trading gold for gold, item for item, which has conditions as you know, nor is it gold for silver, which is permissible if there is a difference in value, nor is it silver for silver, which is permissible if they are equal, and so on. Rather, it is something for which, to this day, you cannot get a clear answer as to what is the material cause of the drop and the fall. And this is connected to the same shares about which the question was asked. The share is now offered, so on one day its price rises, and on another day its price falls, and so on. Knowing that participation in shareholding has another defect in the initial establishment. We know from reality that any project intended to be realized has shares allocated according to what the estimators for this company have determined. So these shares become like goods displayed on the market before these shares have been converted into a real company, such as a car factory or a pharmaceutical factory or any other thing. Before these shares become a real, existing company, they are bought and sold. This is, in my opinion, gambling itself. Why? Because the share whose value is one hundred dinars is bought for either one hundred and ten or one hundred minus ten, and so on. So there is open riba (usury) in it, with no doubt and no concealment. Buying the value for less or more, this is open riba that is not hidden from any person, were it not for people's negligence regarding the reality of trading in shares before they are converted into a trade or a factory or the like. But the matter differs, of course, when these shares are converted into another substance, which, as we mentioned, is trade in some goods or a factory or the like. In this case, selling shares is permissible because you are not selling dirhams or dinars, but you are selling an existing thing, which may have its price rise or fall. But there remains another problem: must the Muslims who are zealous for adhering to their religion find a solution for this problem? This problem is that every company has money, and it deposits it in banks. And when it wants to buy goods, even if it is raw material, it must have money reserved in one of the banks. And this is aiding banks to deal in riba. So from this aspect as well, participation in these shares is not permissible, because in that there is dealing in riba due to cooperation with banks. This is what my mind helped me to express, and time has helped me now.