A man lent money, and its value decreased by the time of repayment; should the repayment be based on the time of the loan or the time of settlement?

The questioner : We ask, and we have previously discussed this issue with you. For example, in the seventies, I borrowed a sum of money, one thousand Syrian pounds. Now the time for repayment has arrived, and the purchasing power of one thousand Syrian pounds in the markets is worth nothing. So, at the time of repayment, should it be one thousand pounds as they were ten, five, or three years ago, when the pound was worth a great deal, but now it is worth nothing? Should the repayment be at the same value, or at a value calculated based on the buying and selling price, multiplied by three, or five, or so on?

The Shaykh : What I see, and Allah knows best, is that repayment should be based on the value of the pound at the time it was borrowed, not at the time of repayment when the value has dropped. And the reverse is the same; meaning, if the value has risen, he pays what is equivalent to the hundred pounds at that time, not at the hour of repayment. I say this knowing that some scholars mention a very strange opinion from Imam al-Shafi'i, stating that if the Caliph or Imam abolishes a currency and a person had borrowed it, he owes nothing; the currency is gone. I see that this involves harm and clear loss on one hand, and on the other hand, it blocks the door to doing good to people through benevolent loans. Because when people know that the pound, for example, or the dinar or the pound sterling, may drop to half its value, and they want to repay it at the current price, there is great harm in that, and it raises the level of doing good among people towards one another. Therefore, justice in such a case is what I mentioned earlier, and Allah knows best.

The questioner : Is there any analogical reasoning (qiyas) we can apply to this currency, meaning gold and silver, for example, or how do we measure it?

The Shaykh : The standard is gold. And I believe that one of the characteristics of social life today is the loss of the gold and silver currencies, and the replacement of them with paper currency. Because this paper currency, as we all know, has no intrinsic value; its value is only nominal. Then many factors intervene, some economic and some political, which cause these paper currencies to fluctuate up and down. As for gold and silver, that is not the case. Therefore, when it is said that gold or silver has become cheap, it is actually the paper currency that these great powers are manipulating that raises or lowers its value according to its own interests. So the reference here is actually the two metals, but unfortunately, today nothing of this remains in circulation except the two metals.