Adopting Islamic money system before abolishing interest


Adopting Islamic money system before abolishing interest



Priscilla Parveen



http://www.nation-online.com/200008/24/n0082402.htm



Islam is 'Din-e-Kamil' a perfect religion. Islam is also 

'Din-e-Fitrat', a

religion of the nature as its laws and commandments are in conformity 

with

laws of nature. Islam is a complete code of life for salvation and 

welfare

of mankind in this world and afterlife. Famous English writer HG Wells

(1866-1946) wrote: "Islam established in the world a great tradition of

dignified fair dealing and created a society more free from social

oppression than any other society had been in the world before." There 

are

a number of prohibitions in Holy Quran and the saying of the Holy 

Prophet

(PBUH) regarding various financial matters. They relate to Zakat,

blood-money, trusts, trade, weights and measures, loans, contracts,

misrepresentation, profiteering and hoarding etc.





The Arabic word 'riba' is 'usur' in English. Riba is translated as

'interest' and indicated as synonym of 'usury'. Literally riba means

'excess or addition'. When delivering the last sermon at Hajjatul Wida,

the Holy Prophet (PBUH) abolished all usury. The punishment (fire of 

hell)

for usury is mentioned in Surah #2 Al-Baqarah verse 275. Riba is

prohibited in Surah #3, Al-e-Imran in verse 130.





The question being debated these days is whether the interest as 

charged

in the modern banking and financial institutions can be regarded as 

riba

which is strictly forbidden in Islam. As the value of money is

continuously regressing, an ordinary Muslim wonders why Allah would not

allow some mark-up or compensation for reduction in value of money. If 

one

wants to save money to buy a plot, or a car or for marriage of 

children.

And if the profit on the money invested in the Governments savings 

schemes

can be regarded as riba. As we will see later in this write-up, there 

are

new forms of riba that-



a. Increase the burden of foreign debts on the masses due to 

devaluation

of currency. That means we have to supply higher quality of goods at 

lower

prices to redeem the debt. This can happen even under interest free

banking. 



b. Harm financial interests of Islamic and Third World countries due to

abandonment of gold standard and fluctuations in foreign exchange rates 

as

manipulated by G-7 countries.





In Bangladesh, the purchasing power of Taka has been declining since 

1972

when the Taka was worth more than a Riyal and you could get a US dollar

for less than Taka 20 only. The worth of Taka continues regress right 

from

then for our imports have been exceeding our exports. We can blame our

trade deficits for devaluation of Taka but there are many other reasons

such as poor economic policies, corruption, and irresponsible attitude 

of

the rulers in printing currency without proper backing. Our dependence 

on

IMF loans to meet the obligations of our trade deficit has been growing

and the cost of living has also been going up and up adding to the

miseries of the people.





Since 1972, after abandoning the gold standard, the IMF has used the

Special Drawing Rights (SDR) as its standard unit of account valued in

terms of a weighted 'basket' of currencies. And IMF rules have been

progressively adapted to floating exchange rates that are controlled by

the big eco-powers. The liabilities of the Third World countries are

inflated and the liabilities of the G-7 countries are reduced by 

jugglery

of exchange rates. This can be termed a new kind of riba. IMF allows

standby loans to members in BOP difficulties after certain corrective

measures are instituted besides paying interest.





The G-7 has been blamed for the 1997 stockmarket crash. It is also 

blamed

for economic exploitation of Asian tigers and Far Eastern countries in

1996-97. There has been growing criticism of the group for its policies 

of

manipulating the exchange rules to maintain their economic supremacy 

and

to obstruct flow of funds to oil rich Islamic countries by unfair 

means.

And the World Bank, IMF are behaving like agents of the G-7 countries 

who

are accused of practicing economic slavery.





We have been suffering trade deficit every year and depend on loans to

meet our liabilities. And there are chances of default.





Indeed if we conform to Islamic code of life, our diseased economy may 

be

cured. It would be a fallacy to believe that merely by adopting Islamic

banking and interest free economy our problems would be solved. Though

containing the imports within our income from exports will continue to 

be

crucial and vital, one of the most important steps to change our

eco-system would be to modify our Money system for the sake of fairness

and equity. Our money system must conform to the standards of trust,

measures, weight and balances as well as good governance as prescribed 

in

Quran-e-Hakim and the Sunnah.





* For evolving standards for paper and credit money, there appears to 

be

need for ijtehad. Holy Quran advises again and again to ponder over its

verses.





* Our currency may have to be linked in gold or silver with ample 

reserves

to maintain stability and to make gold the promise to convert the 

currency

to silver or gold on demand.





Increase in GDP would continue to be vital for stability of the 

currency,

otherwise gold and silver coins will be smuggled out. In early days, we

have to ban import of many items to avert trade deficit. Our policy of

inviting foreign capital would need to be re-appraised as transfer of

profits to investors' countries may have an impact on our BOP with IMF.





These will not be enough. It is vital to acquire political stability 

and

maturity by inculcating the spirit of Islamic brotherhood among the

masses. As a nation we must increase our individual and collective 

output

and production. Principle of fair play and justice must be upheld and

habit of honest day's work and fair dealings in all walks of life must 

be

developed. We must engage in jehad against corruption, demagoguery,

illiteracy, nepotism and many other social evils. We must promote

research, exploration, training and education and introduce reforms in

religious madaris and launch programmes for adult literacy.






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