Does riba (usury or interest) apply to paper currency?
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The Shaykh : All right, I sold you a paper note, one real for two reals, is that riba (usury or interest)?
The student: ...
The Shaykh : It is not riba (usury or interest), it is not riba (usury or interest). This is one paper note for two paper notes, meaning one Saudi real in paper for two Saudi reals in paper, is that permissible or not?
The student: From which of the categories? Gold, silver, wheat, barley, dates, salt? Silver?
The student: Meaning silver, Shaykh.
The Shaykh : We say it is either silver or gold. It does not become so if we say this is gold or silver; everyone would say we are lying. It is not gold or silver; it is paper.
The student: Meaning gold and silver.
The Shaykh : We say that there is what? Money in gold or silver deposited that secures this currency. In reality, it is in the position of gold and silver because people deal with it and make it the standard for goods, just as they make the dirham and the dinar the standard. So, even though it is not of their kind, it is in their meaning. Based on this, it is not permissible for me to sell one paper real for two paper reals. All right, one iron real for two paper reals? Yes, this is a problem. For some, it is not a problem. For some, it is forbidden without doubt. For some, it is permissible without doubt. And for a third group, there is doubt in it. As for the one who says there is doubt in it, does he prioritize the side of prohibition out of caution, or does he prioritize the side of permissibility as a dispensation? Because what has not been proven to be forbidden, Allah the Exalted said:[Al-Baqarah 2:275] And this is a sale. So, as long as its prohibition is not established, do not restrict the servants of Allah. Allah has made sale permissible, and this is a type of it. As for the one who said it is forbidden, he said that this is a substitute for the dirhams, and the substitute has the ruling of the substituted item. Just as it is not permissible to sell one silver dirham for two silver dirhams, so it is not permissible to sell one paper note for two paper notes, nor is it permissible to sell a paper note for silver except for what it equals according to the system. But the correct opinion, which I see, is the permissibility for a person to sell paper currency for metal coins, even if they increase or decrease. For example, it is permissible for me to come to a person and say, "Here is a ten-real note, give me nine in iron currency." There is nothing wrong with this because there is no evidence for its prohibition. And if there is no evidence for prohibition, the original ruling is permissibility. These paper currencies appeared recently; at first, they were not known, so the scholars differed in them, as is the custom of scholars regarding what is new. You will find them differing in it, some saying that it is not permissible to deal with these paper currencies except in the case of extreme necessity, because their reality is the sale of a debt. The state that produced these notes committed itself to the holder of the note for what is written on it. So, if you sell it to a person, it means you sold a debt on another person, and the sale of a debt is forbidden. But if extreme necessity calls for it, then do it. Based on this opinion, if your family consists of six people, and each one needs a cup of tea, needing six cups, is it permissible for you to buy a seventh cup with these paper dirhams? No, because there is no necessity in this. A person craved meat and said, "By Allah, today my soul has been drawn to meat; I love meat, and I now have a ten-real note. I want to go to the market to buy meat because I crave it." We said to him, "Do you have a loaf of bread to eat so you do not die?" He said, "Yes, I have what satisfies my hunger." We say to him, based on this opinion, do not buy meat. Why? Because it is not permissible to deal with this currency except in necessity, since it is the sale of a debt on another person. This is what some scholars said. And whoever wants to know this should read the book "Iqna' al-Nufus bi-Ilhaq 'Amalat al-Anwat bi-'Amalat al-Fulus". And some scholars said: Dealing with it is permissible, and there is no riba (usury or interest) in it at all, and that it is goods like clothes and vessels and the like. But this opinion is weak because this opinion leads to the fact that if a person has millions of these dirhams, he does not trade with them, so there is no zakah (the obligatory alms) in them. And this is undoubtedly a false opinion.
And some scholars said: Riba (usury or interest) applies to it, both riba al-fadl (usury of excess in a like-for-like exchange) and riba al-nasi'ah (usury of deferment). And some said that riba al-nasi'ah (usury of deferment) applies to it, but not riba al-fadl (usury of excess in a like-for-like exchange). And this opinion is, in my view, the most correct of the opinions: that riba al-nasi'ah (usury of deferment), meaning delaying the taking of possession, is forbidden, while increase and decrease are not. This opinion is the most just of the opinions, and with it we speak, and we ask Allah the Exalted to make us successful in reaching the truth. The most important thing is that you know the moneys in which riba (usury or interest) exists. And, if Allah wills, in the next lesson, we will give you examples and throw them at you: is there riba (usury or interest) in them or not, if Allah wills, and we will limit ourselves to that, because the time for questions has come.
The questioner : ...
The Shaykh : What?
The questioner : ...
The student: ...
The Shaykh : It is not riba (usury or interest), it is not riba (usury or interest). This is one paper note for two paper notes, meaning one Saudi real in paper for two Saudi reals in paper, is that permissible or not?
The student: From which of the categories? Gold, silver, wheat, barley, dates, salt? Silver?
The student: Meaning silver, Shaykh.
The Shaykh : We say it is either silver or gold. It does not become so if we say this is gold or silver; everyone would say we are lying. It is not gold or silver; it is paper.
The student: Meaning gold and silver.
The Shaykh : We say that there is what? Money in gold or silver deposited that secures this currency. In reality, it is in the position of gold and silver because people deal with it and make it the standard for goods, just as they make the dirham and the dinar the standard. So, even though it is not of their kind, it is in their meaning. Based on this, it is not permissible for me to sell one paper real for two paper reals. All right, one iron real for two paper reals? Yes, this is a problem. For some, it is not a problem. For some, it is forbidden without doubt. For some, it is permissible without doubt. And for a third group, there is doubt in it. As for the one who says there is doubt in it, does he prioritize the side of prohibition out of caution, or does he prioritize the side of permissibility as a dispensation? Because what has not been proven to be forbidden, Allah the Exalted said:
But Allah has permitted trade
وأحل الله البيعAnd some scholars said: Riba (usury or interest) applies to it, both riba al-fadl (usury of excess in a like-for-like exchange) and riba al-nasi'ah (usury of deferment). And some said that riba al-nasi'ah (usury of deferment) applies to it, but not riba al-fadl (usury of excess in a like-for-like exchange). And this opinion is, in my view, the most correct of the opinions: that riba al-nasi'ah (usury of deferment), meaning delaying the taking of possession, is forbidden, while increase and decrease are not. This opinion is the most just of the opinions, and with it we speak, and we ask Allah the Exalted to make us successful in reaching the truth. The most important thing is that you know the moneys in which riba (usury or interest) exists. And, if Allah wills, in the next lesson, we will give you examples and throw them at you: is there riba (usury or interest) in them or not, if Allah wills, and we will limit ourselves to that, because the time for questions has come.
The questioner : ...
The Shaykh : What?
The questioner : ...