The Shari’ah left the issue of exchange open for people so that they could base it upon whatever they wanted, which is proven by the generality of the evidences for trade and hiring such as:
وَأَحَلَّ اللّهُ الْبَيْعَ
“And Allah has permitted trade” (2:275)
for anything and by anything, and the narration:
أَعْطُوا الأَجِيرَ أَجْرَهُ قَبْلَ أَنْ يَجِفَّ عَرَقُهُ
“Give the worker his wages before his sweat dries.” (Ibn Majah)
So the worker should receive his salary when he finishes his work, whatever the nature of that wage.
Additionally, these things that are used for exchange are not actions such that they would in origin be restricted (to the evidence) and so their permission would require an evidence, but rather they are things. The origin regarding things is that they are permitted as long as there is no evidence to prohibit them, and there is no evidence reported which prohibits using anything as an exchange, and so accordingly it is permitted to carry out Shari’ah transactions with them whether buying and selling, giving as a gift or exchanging with the exception of anything where there is a text prohibiting its exchange. Based upon this, exchanging goods for money, and money for goods is permitted without any restrictions, except for exchanging money with money because it has specific rules and so it is restricted by those rules. In the same manner, exchanging effort for money, and money for effort, is permitted without restriction unless the goods or service have been mentioned in a text as being forbidden. Accordingly, to exchange goods for a specific form of money, and in the same manner to exchange a service or effort for a specific unit of money, is also permitted without any restriction, whatever the unit of that money may be. So irrespective of whether that unit doesn’t have anything backing it, such as fiat currency, or if it was backed by a specific amount of gold, such as secured paper currency, or if the unit was backed by gold and silver to its value such as representative paper currency, all of them are considered to be allowed to trade with.
Therefore, it is correct to exchange goods or services for any unit of money and it is permitted for the Muslim to sell for any currency and to buy with any currency and to hire with any currency and to be employed for any currency.
However, if the State wanted the lands that it ruled to adopt a specific unit of money, such that it implements the rules of the Shari’ah related to finance from the angle of it being wealth such as Zakah, exchange, interest and anything else, and the rules related to the individual who owned the wealth such as blood money, the minimum stolen amount that would be considered theft, and so on, then it does not have an open hand to use any specific monetary unit, but rather it is restricted to use only a specific type of money and no other. The Shari’ah specified the monetary unit, from a specific genus which the text mentioned, and this is gold and silver. So if the State wanted to issue a currency, it is restricted to the money being gold and silver and nothing else. The Shari’ah did not leave the State to issue any money it pleased, from any type it wanted, but rather it specified the monetary units which the State could make as a currency for itself if it wanted to issue a currency with specific monetary units; which are gold and silver alone. The evidence for this is that Islam connected to gold and silver with fixed rules, and without any change.
So when blood money was specified, it was specified from a specific amount of gold, and when the cutting of the hand of the thief was obligated, the minimum amount that the punishment would be applied for was specified from gold; the Messenger (saw) said in his message to the people of Yemen:
وَأَنَّ فِي النَّفْسِ المُؤْمِنَةِ مِاْئَةٍ مِنَ الإِبِلِ، وَعَلَى أَهْلِ الْوَرَقِ أَلْفُ دِينَارٍ
“and for the believing soul (if killed) it is one hundred camels, and for the people of silver one thousand Dinars” (Ibn Qudamah, Al-Mughni).
And in the report in Al-Nisa’i regarding the letter of the Messenger of Allah (saw) to the people of Yemen:
“and upon the people of gold it is one thousand Dinars” in place of: “people of silver”.
And he (saw) said:
لا تُقْطَعُ يَدُ السَّارِقِ إِلاَّ فِي رُبْعِ دِينَارٍ فَصَاعِدًا
“Do not cut (the hand) except for a quarter of a Dinar and more” (Muslim).
This defines specific rules with Dinars and Dirhams, and the weight of the Dinar measured by gold, and the Dirham by silver, which made them monetary units analogous to the value of objects and effort. This monetary unit is the currency and its basis. The fact that the Shari’ah textually connected gold and silver to the Shari’ah rules when these rules were related to currency is evidence that the currency can only be from gold and silver alone.
Additionally, when Allah (swt) obligated Zakah, He (swt) obligated it upon gold and silver alone, and specified the Nisab from gold and silver, and so the consideration that the Zakah upon money is by gold and silver specifies that the currency is gold and silver, and if there was a currency other than them then Zakah for money would have been obligatory upon it. Because there is no text for Zakah upon money except upon gold and silver, this indicates that there is no consideration for any other type of money. Also, the rules of currency exchange which were revealed regarding monetary transactions alone addressed gold and silver alone and all of the financial transactions mentioned in Islam are dealt with in gold and silver. And currency exchange is to sell money for money, either to sell one type of money with itself, or to sell it for another type of money, and by another expression currency exchange is to sell a currency for a currency. The Shari’ah specified currency exchange – which is a purely monetary transaction – with gold and silver alone, which is a clear evidence that the currency must be from gold and silver and nothing else. He (saw) said:
وَبِيعُوا الذَّهَبَ بِالْفِضَّةِ وَالْفِضَّةَ بِالذَّهَبِ كَيْفَ شِئْتُمْ
“Sell gold for silver as you please” (Bukhari).
And Muslim reported similar to it through Ubada Bin Al-Samit.
The Messenger (saw) also said:
الذَّهَبُ بِالْوَرِقِ رِباً إِلاَّ هَاءَ وَهَاءَ
“Gold for silver is interest (usury) unless it is exchanged hand to hand” (Agreed upon).
Above that, the Messenger (saw) specified gold and silver as money, and made them alone the measures of monetary value which the values of goods and efforts were measured against, and upon which basis transactions were carried out. The measures for this currency were the Awqiya, the Dirham, the Daniq, the Qirat, the Mithqal, and the Dinar. These were all well known and famous at the time of the Prophet (saw), and the people would transact with them. And it is confirmed that he (saw) consented to them. All of the trade and marriages took place with gold and silver, as has been confirmed by several authentic narrations, and so the fact the Messenger (saw) made gold and silver the currency, and the fact that the Shari’ah linked some of the Shari’ah rules with them alone, and Zakah upon money is limited to them, and currency exchange and financial transactions were limited to them, are all clear evidence that the money of Islam is only gold and silver and nothing else.
We find that the Shari’ah evidences concerted in indicating that the currencies adopted by the state in Islam is gold and silver, and that it does not adopt any other type of currency, and although the Prophet's (saw) approval of these two currencies is sufficient alone to prove the legal ruling on the subject of currencies in Islam, the Shari’ah did not stop at the point of the Messenger (saw)’s approval for the two currencies, but it went beyond that to establishing evidences on the topic of usury, the topic of zakat, the topic of blood money and so on.
Great answers start with great insights. Content becomes intriguing when it is voted up or down - ensuring the best answers are always at the top.
Questions are answered by people with a deep interest in the subject. People from around the world review questions, post answers and add comments.
Be part of and influence the most important global discussion that is defining our generation and generations to come