Islamic Concept of Money

Question and answer details
Tom Mar Alem
As-salamu `alaykum. What is the Islamic conception of money? What are the characteristics of money according to Islam? What traits must a substance have in order to qualify it as money? We know that for water to be valid when making wudu’, it has to be tasteless, odorless and colorless (clear water). Yet, what must money have in Shari`ah in order for it to be classed as money?
Monzer Kahf

Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

Dear brother, you are to be commended for your important question and your keen desire to know more about Islam and its rulings.

Money in Islam is like it in any other system. However, Islam has some rules regarding the exchange and use of money itself.

Responding to your question, Dr. Monzer Kahf, a prominent Muslim economist and counselor, stated,

Water has different characteristics and usages, some of these characteristics suit certain usages but not others. Money, on the other hand, has several characteristics which suits all its functions.

There is no difference between Money in Islam and money in other systems/societies. At the time of the Prophet (peace and blessings of Allah be upon him), he himself used the currency, gold and silver which were coined or made in Persia and by Romans. The same were used in Arabia before Islam. He did not make any change on money except for one thing which aims at avoiding interest on debts under the hide of sale. So, he prohibited sale of money for money except with immediate and full delivery of both. If they are the same like gold for gold or dollars for dollars, they should be of the same quantity too.

So, except for this, which is called Riba al-Fadl, please, read any university textbook in America about money and its functions. This is exactly what Islamic money is.

Allah Almighty knows best.