Is paper currency a commodity or a promissory note?

The questioner : Regarding paper currency, what is your opinion on it? Is it a commodity or a promissory note?

The Shaykh : The problem with paper currency today is the problem of problems. Until recently, they considered paper currencies to be like promissory notes, meaning they had what do we call it, a reserve in the banks of gold. So we used to say that these paper currencies must be considered as if they were gold coins, and consequently, it is not permissible to buy gold with them except for like with like. Then the problem of problems came: the devaluation of these currencies in some countries, as happened recently in Jordan, and before that in Iraq, and before that in Syria, and so on. So people fell into a state of confusion. And now we have heard that that reserve has been abolished, so we do not know how to deal with these paper currencies. And I say in truth that it is the problem of problems, because if we do not consider them as we used to consider them before, with a reserve of gold for each according to its value, what do we consider them to be? If we consider them paper, then there is no zakah on this paper. And if we consider the metal of the paper as any other metal, there is also no zakah on it. We consider it paper, meaning silver, likewise, no. In reality, I used to say something before, but now I am holding back and not saying it. I have returned to being confused; I do not know how to deal with this currency after we learned that it has no reserve of gold on one hand, and with its devaluation and appreciation. You know how the Jordanian dinar fell; until about a year ago, the Jordanian dinar was equal to ten Saudi riyals. The Jordanian dinar fell until it became three Saudi riyals, equal to one dinar, then it rose a little and became a middle ground, meaning the dinar is five riyals. In truth, I hope that one of the people of knowledge, if he has a substantive study as they say, would benefit us with his opinion on this problem so that we can benefit from it.

The questioner : I heard speech about the World Bank and the extent to which a state, any state, follows the path of the great powers. If the small states follow the path of the great powers, they walk under their will. At that time, they negotiate with them and give them loans, or else they conspire against them, as happened in Jordan. I heard beautiful, scientific speech, and I hope to record it for you.

The Shaykh : And this solves the problem, in your opinion?

The questioner : No, rather issue a fatwa based on it, if Allah wills.

The Shaykh : No, I want the people of knowledge.

The questioner : The Fiqh Council, the Fiqh Councils, these that have arisen, have a study on this topic in one of its volumes. The volume was published more than three [years ago], and they discussed in it whether zakah is due on it or not. Meaning, those present in the Fiqh Council did not agree.

The Shaykh : And this is the problem.

Another questioner : Regarding riba, does it apply to it?

The Shaykh : In the first case, riba applied to it.

Another questioner : And in the second case?

The Shaykh : In this, we hold back.