Issue: The ruling on exchanging metal riyals for paper riyals.

The Shaykh : Regarding the exchange of metal riyals for paper riyals, my conscience is at ease with its permissibility, and I have no doubt in my mind that it is permissible. Our contemporary scholars have differed on this, debating whether it is permissible or not. Some of them held the view of prohibition, stating that the metal riyal is the paper riyal, with no difference between the two. Others said, rather, there is a difference between them, because the genus is different in reality and value, and their equalization in value is based on the state's valuation. They said, the evidence for this is: if you brought one hundred kilograms of this metal and one hundred kilograms of paper, would the value differ between them or not? It differs. Iron is bought for its own sake, while paper has no value; were it not for the state's estimation of it, it would have no value at all. They said, therefore, since the genus differs, the reality differs, and the value differs, there is no harm in it, based on the saying of the Prophet (peace and blessings be upon him) . Some of our scholars say it is prohibited because the intended purpose in both is one, and actions are by intentions, and every person will have what he intended. The state made their value nominally equal. Shaykh 'Abd al-'Aziz ibn Baz (may Allah reward him and have mercy on us and him) and the Permanent Committee had issued a fatwa of prohibition. Then the Shaykh told us in a session of the Council of Senior Scholars in Ta'if these days that he used to say it was prohibited, but he paused on it, pausing on whether it is forbidden or not. As for me, my conscience is at ease with its permissibility, and I have no doubt in it. Our Shaykh 'Abd al-Rahman ibn Sa'di (may Allah have mercy on him) used to permit it, and even more than this; he held that it is permissible to have a difference in amount with a delay in possession, on the condition that they do not stipulate a specific term. For example, if I give you one hundred for a period in exchange for it, or more, then there is no harm in it, on the condition that the term is not stipulated. So if he says, "I gave you, for example, one hundred for one hundred and ten until one year," then this is prohibited according to our Shaykh 'Abd al-Rahman. But what appears to me is that delaying possession is prohibited, whether by stipulating a term or not. As for the difference in amount, there is no harm in it.
So we return to the issue of zakah. The stronger opinion regarding these currencies is that zakah is obligatory in them absolutely, whether they are intended for trade or not. Accordingly, if a person has money he is collecting to get married with, is zakah due on it? From these currencies.

The questioner : Yes.

The Shaykh : Yes, or if he has money from currencies with which he will buy a house, yes, zakah is obligatory on it. Or if he uses it to pay off a debt, zakah is obligatory on it, except according to the one who says that a debt prevents the obligation of zakah to the extent of the debt. If he is collecting dirhams in order to perform Hajj with them, is zakah due on it?

The questioner : ... .

The Shaykh : Yes? Zakah is due on it. If he is collecting dirhams in order to give them as zakah.

The questioner : It is even more so.

The Shaykh : Yes, a fortiori. This man intended the zakah. May Allah reward him with good.