The following is an an extract from a transcript of an interview completed in September 2021 with Sh. Dr. Sajid Umar by the Islamic Finance Advisory on Crypto-currencies. The full transcript and video link can be found here.
Key answers to the following questions are answered in this piece and are as follows:
- Is the concept of money in Islam something revealed?
- What was the difference between the dinār and the dirham in terms of weight?
- Who, after Islam, was the first to mint a coin in a metal other than Gold and Silver, and what was this coin known as?
- Who was the first person to mint the very first Islamic Gold Coin?
- What impact did the minting of the first Islamic Gold Coin have on the idea of money in Islam within Islamic Scholarship?
- What are the characteristics of wealth and money, and what is defining characteristic of money from the perspective of Islamic Scholarship?
- Is Fiat currency a form of money from the perspective of Islamic scholarship? Why?
The Idea of Money from an Islamic Perspective
When Muhammed ﷺ became a Prophet and was sent as a Messenger, the people of the region would conduct trade using the Roman gold coin known as the dinār, and the Persian silver coin known as the dirham. And at that time, these metals were used for exchange in accordance with their weight. Some sources highlight that for this period, seven gold coins were equal to ten silver coins in terms of value. This exchange rule was based on the amounts of each respected metal in weight that was present in those coins.
And accordingly, the Messenger ﷺ tacitly approved peoples’ trade based on the currency of the time, and things remained like this. This was with the exception of a few framing rules in relation to the exchange of gold and silver, when ribā became prohibited.
In terms of currency use, however, this practice continued until the time of ʿUmar رضي الله عنه. For at his time, he minted a coin upon the style of the Roman dinār, but with a metal other than gold and silver. This was called the fals. Sometimes he wrote on these coins his name, and on others phrases like (Alḥamdulillāh), (Bismillāh), and (Allāh Rabbī).Continue Reading…