Money and Value of Money in Islam

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Islamic Economists Recognize that Money has value but value of Money is not increasing with just time passing unless invested in some project that itself is increasing. Islamically the value of money is stored within the commodity and cannot be obtained outside. Thus, individuals cannot sit before a computer and arbitrarily manipulate the value money. Money has standard of value which measures the relative different goods and services.

 

Islam only recognized commodities that have value in themselves and can still act as money. These include gold (Dinar), silver (Dirham); rice, dates, wheat, barley and salt to which bay al salam is prohibited. According Islam money has no intrinsic value just a medium of exchange as it can’t sold or rented so as generate surplus , it itself has no opportunity cost ,it can’t accomplish human needs unless converted into a commodity.The transactions of sale and purchase of commodity can only be effected on an identified and specific commodity

 

A commodity can fulfil human needs directly, and two, can be of different quality while money has no differential quality in the sense that a new note of Rs 500 is exactly equal in value and quality to an old note of Rs 500Also, commodities are transacted or sold by specifying the commodity in question or at least by giving certain specifications.Money however, cannot be specified in a transaction of exchange. Even if it is, it would be of no use since the different denominations of money summing into equal amount are exactly the same. It follows then that one would agree that exchanging Rs 500 with Rs 550 in a spot transaction would make no sense since the money in itself has no intrinsic utility or a specified quality and thus the excess of amount on either side is without consideration and hence not allowed under Shari’ah that explains the Islamic Principle which is the beauty of Islam.

 

 

 

 

 

 

 

 

 

 

 

 

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