Fiqhi Ruling on Paper Currency and Its Equivalence to Gold and Silver
✍ Written by: Saudi Fatwa Committee (Fatāwā al-Lajnah ad-Dā'imah)
What is the ruling if all currencies are considered as equivalent to gold?
Gold and silver serve as the foundational standards for all these currencies. These currencies are therefore considered their equivalent in Islamic jurisprudence.
✔ When dealing with the same currency, any transaction involving an increase (interest) is not permissible.
✔ In terms of riba (usury), even a single currency is treated as equivalent to gold and silver, and likewise, two currencies (from different countries or of different types) are also their equivalent.
Therefore:
➤ Exchanging the same currency (e.g., riyal for riyal) must be done equally and hand to hand; any increase is prohibited.
➤ Exchanging two different currencies (e.g., dollar for riyal) with a difference in amount is permissible, but it must be on the spot (no credit) — deferred exchange is not allowed.
This confirms that:
✔ In the context of usury, both one currency and two different currencies are treated as equivalent to gold and silver.
(Reference: Ibn Baz – Majmūʿ al-Fatāwā wa al-Maqālāt, 19/169)
✍ Written by: Saudi Fatwa Committee (Fatāwā al-Lajnah ad-Dā'imah)
✦ Question:
What is the ruling if all currencies are considered as equivalent to gold?
✦ Ruling and Explanation
Gold and silver serve as the foundational standards for all these currencies. These currencies are therefore considered their equivalent in Islamic jurisprudence.
✔ When dealing with the same currency, any transaction involving an increase (interest) is not permissible.
✔ In terms of riba (usury), even a single currency is treated as equivalent to gold and silver, and likewise, two currencies (from different countries or of different types) are also their equivalent.
Therefore:
➤ Exchanging the same currency (e.g., riyal for riyal) must be done equally and hand to hand; any increase is prohibited.
➤ Exchanging two different currencies (e.g., dollar for riyal) with a difference in amount is permissible, but it must be on the spot (no credit) — deferred exchange is not allowed.
This confirms that:
✔ In the context of usury, both one currency and two different currencies are treated as equivalent to gold and silver.
(Reference: Ibn Baz – Majmūʿ al-Fatāwā wa al-Maqālāt, 19/169)
