Khutbas by Imam Habib
Khutba on Money
الحمد لله، الحمد لله الذي حفِظ سنةَ حبيبِه بالفقهاء العاملين، والشيوخِ العارفين، نحمده تعالى ونستعينه، ونشكره تعالى ونستغفره ونستغيثه، نعوذ بالله من شرور أنفسنا ومن سيئات أعمالنا، من يهد الله فهو المهتد ومن يضلل فلن تجد له وليا مرشدا، ونشهد أن لا إله إلا الله وحده لا شريك له، له الملك و له الحمد، يحيي ويميت، بيده الخير، وهو على كل شيء قدير، ونشهد أن سيدنا و مولانا محمداً عبده ورسوله، وحبيبه وصفيه، بلغ الرسالة وأدٌى الأمانة ونصح الأمة، النبي الأمي الذي أرسله الله بالهدى والدين الحق، بشيرا ونذيرا بين يدي الساعة، صلى الله عليه وسلم وعلى آله وأصحابه ومن تبعهم بإحسان إلى يوم الدين.
أما بعد! فيا عباد الله اتقوا الله حق تقاته ولا تموتن إلا وأنتم مسلمون. يأيها الذين ءامنوا اتقوا الله وقولوا قولا سديدا يصلح لكم أعمالكم ويغفر لكم ذنوبكم. ومن يطع
الله ورسوله فقد فاز فوزا عظيما. اتقوا الله فيما أمر وانتهوا عما نها عنه وزجر
We mentioned in the khutba last week that, in the modern global financial system, riba is far more extensive and widespread than most people realise, for it is not limited to interest-bearing loans or bank accounts but has crept into the currencies that every one of us use on a daily basis in every one of our financial transactions. Paper money is itself riba. In order to show this, we have to ascertain what, exactly, paper money is and the various different forms that it takes.
Originally, paper money was a receipt representing a certain amount of gold or silver deposited somewhere, hence the name of the currencies. A pound sterling represented a pound weight of sterling silver while the dollar was the name assigned to a fractional part of a troy ounce of silver. Thus, paper in its original conception was a promise of payment, a bond, a debt owed by the issuer of the paper to the holder. But even in this original form, paper currency can not be considered to be halal.
Firstly, the money that your paper represents is being held in trust by the bankers or treasurers who issued it and such people are not, on the whole, Muslims, especially when the currency being used is one such as the dollar, pound or euro. And it is not permissible to entrust one's wealth to a non-Muslim, especially if he lives outside of the Dar al-Islam. Allah says,
وَمِنْ أَهْلِ الْكِتَابِ مَنْ إِنْ تَأْمَنْهُ بِقِنْطَارٍ يُؤَدِّهِ إِلَيْكَ وَمِنْهُمْ مَنْ إِنْ تَأْمَنْهُ بِدِينَارٍ لَا يُؤَدِّهِ إِلَيْكَ إِلَّا مَا دُمْتَ عَلَيْهِ قَائِمًا ذَلِكَ بِأَنَّهُمْ قَالُوا لَيْسَ عَلَيْنَا فِي الْأُمِّيِّينَ سَبِيلٌ وَيَقُولُونَ عَلَى اللَّهِ الْكَذِبَ وَهُمْ يَعْلَمُونَ
the translation of which is, “Among the People of the Book there are some who, if you trust them with a pile of gold, will return it to you. But there are others among them who, if you trust them with a single dinar, will not return it to you, unless you stay standing over them. That is because they say, ‘We are under no obligation where the gentiles are concerned.’ They tell a lie against Allah and they know it.” Ibn Arabi said in Ahkam al-Quran regarding this aya,
فائدتها النهي عن ائتمانهم على مال
“What is gathered from this is that it is prohibited to entrust them with your wealth.” And the reason for that is clear from the ayat - because they are liars who do not keep their word and who think they have no obligation when it comes to their depositors. And that is precisely what happened, for they went back on thier agreement and refused to honour their original pledge to, in the case of the dollar, give each depositor an ounce of gold in exchange for every 35 dollars.
And even were the issuers of the currency Muslim or non-Muslims under Muslim rule such that we could consider to be standing over them, still there would be another matter to be addressed and that is whether that promissory note can be used in transactions in the place of money. Well, given the fact that a promise to pay is a debt, clearly it is prohibited for at least two reasons. The first is gharar. It is narrated from Abu Hurayra that the Messenger of Allah,
نهى عن بيع الغرر
“That he forbade any transaction involving danger or uncertainty”, and that is most certainly the case when paper money is circulated, for it is the transference of a debt without the direct confirmation and guarantee of the one who owes the debt. In order for a debt to be transferred from one person to another, a fresh contract or agreement must be drawn up between the debtor and the new creditor so that the one who buys the debt can receive guarantees that the debtor has the ability to pay and is not going to renege because he is overstretched and has too many obligations. And that is precisely what we see with modern banks and currency issuers, for every one of them issues many times more currency in paper than they have gold in their vaults. So, they are not in a position to honour all their debts and so cannot guarantee them all.
The second reason the use of a debt as currency is prohibited is because its usage gives rise to riba an-nasi'a whenever the transaction involves gold and silver or imperishable foods since it negates the hand-to-hand condition which is essential for all such transactions. And it also gives rise to sale of a debt for a debt whenever paper money is exchanged paper money in a transaction and that is categorically forbidden by both the sunna and the consensus of the Muslims. It is narrated by Ibn 'Umar that the Prophet,
نَهَى عَنْ بَيْعِ الْكَالِئِ بِالْكَالِئِ
“forbade the sale of something deferred for something deferred.” In other words, a debt for a debt. And Ibn al-Mundhir said,
أَجْمَعَ أَهْل الْعِلْمِ عَلَى أَنَّ بَيْعَ الدَّيْنِ بِالدَّيْنِ لاَ يَجُوزُ
“The people of knowledge unanimously agreed that it is not permissible to sell a debt for a debt.” And that is what happens in the majority of transactions involving paper money, for often a piece of paper is exchanged for an item plus change, that change also being a debt, a promise to pay.
However, today, paper money has moved on to a new stage. It is no longer, although it may still claim to be, a promise to pay anything. The gold standard has been abolished and the value of paper currency is established solely by dictat - all citizens of any particular country are required by the law of legal tender to accept and honour the currency issued by the government of the land. This type of currency is called fiat currency, derived from the latin word 'fiat' meaning 'let it be'. Among the definitions that exist for fiat money is the following:
“Money that is established by government decree and is not backed by anything other than a government trust. Fiat money has no intrinsic value;”
Is this a valid form of currency from the perspective of Islamic law? Not according to Imam Malik or the jumhur of the scholars. Imam Malik defined money (nuqud) as being “any merchandise commonly accepted as a medium of exchange.”
The first thing that this tells us is that money must be a merchandise - something that has intrinsic value in its own right. So it could be paper, but only if it is the value of the paper that is taken into consideration, not the number that is written on it. An ounce of gold is still a ounce of gold regardless of whether 10, 20 or 100 is inscribed upon it.
Secondly, money must be commonly-accepted by the people - it cannot be imposed from above. A government may not force its populace to use one currency as opposed to another, even the gold dinar. The currency that they use is whatever meets with common approval and common consent and that is clearly not the case with paper as the people are forced into using it by their governments to such a degree that a country's citizens may be imprisoned if they refuse to accept it or use something in its stead that has not been sanctioned. Indeed, in the aftermath of the French revolution, many thousands were executed as a result of not accepting the government-printed currency.
Some Muslims define money somewhat differently, mistakenly attributing this view to Imam Shafi'i - they consider money to be no more than a medium of exchange, a representation of value and nothing else. Money's only value is the amount of goods it can be exchanged for. Unlike raw gold, they say, a gold coin is not acquired because of its usability but rather simply as a means to facilitate the acquisition of other goods. The value of a gold coin, they say, is dependent on the value people assign to it and has no relation to the content of gold it contains. And similarly with paper currency, what is important is the value society assigns to it and not the intrinsic value of what it is printed upon. However, this is a gross misunderstanding of Imam ash-Shafi'i's position on the thamaniyya of money, for he still considered weight to be the final criterion when it came to the exchange of currency, thereby showing that weight can never be overlooked regardless of what nominal value people placed on a coin. Even if what was called a dinar weighed 10 grams and what was called 10 dinars weighed 50 grams, it would not be permissible to exchange 10 of one for 1 of the other. As the Messenger of Allah said,
الذهب بالذهب تِبْرُها وعَيْنها والفضة بالفضة تبرها وعينها
“Gold for gold, whether minted or unminted, and silver for silver, whether minted or unminted.“
And secondly, considering money in this way means that every transaction involving such currency involves gharar (danger or uncertainty), for the value of a piece of paper currency is not fixed like that of a gold dinar, for example, which has a value as a good beyond its monetary function. The value of a paper currency fluctuates according to the speculations of major speculators in the money markets and the comparative strength or weakness of a particular economy, and cannot be guaranteed at any moment in any physical substance. If you bought something for a hundred dollars, you could not be certain of the value that those dollars represent at any moment, for their value is constantly changing and indeed decreasing on account of inflation. Hence it is a transaction involving the exchange of goods for something whose amount is totally unspecified. And that is not permitted in the Shariah - it is gharar and gambling - it is like selling someone the number of fish in the sea or the number of calves that will be born in the coming year.
And if that were not enough, the haram nature of paper money is made even more clear by the fact that using it requires us to discard many of the fiqh rulings relating to buying. selling and exchange, and requires us to reform them in order to ensure that transactions remain just. Thus, modernist reformers, because of their blind acceptance of the modern financial system, have been forced to accept interest in order to offset inflation, and so on and so forth.
Paper money is clearly not valid in Islam and so it is incumbent upon us to search for a currency that is.
أقول قولي هذا وأستغفر الله لي ولكم ولسائر المسلمين من كل ذنب فاستغفروه إنه هو الغفور الرَّحيم.الحمد لله الحمد لله رب العالمين، وأشهد أن لا إله إلا الله وحده لا شريك له وأشهد أن محمداً عبده ورسوله، صلى الله وسلم وبارك عليه وعلى آله وصحبه، والتابعين وتابعي التابعين ومن تبعهم بإحسان إلى يوم الدين.
أما بعد! فيأيها الذين ءامنوا اتقوا الله ما استطعتم واسمعوا وأطيعوا وأنفقوا خيرا لأنفسكم. يا عباد الله أوصيكم وإياي بتقوى الله وطاعته وأحذركم وإياي عن معصيته ومخالفته. قال اللَّهِ تعالى في كتابه العزيز بعد أعوذ بالله من الشيطان الرجيم، زُيِّنَ لِلنَّاسِ حُبُّ الشَّهَوَاتِ مِنَ النِّسَاءِ وَالْبَنِينَ وَالْقَنَاطِيرِ الْمُقَنْطَرَةِ مِنَ الذَّهَبِ وَالْفِضَّةِ
Allah says in His noble book, the translation of which is, “To mankind the love of worldly appetites is painted in glowing colours: women and children, and heaped-up mounds of gold and silver,” Although it is permissible in the Shariah to use any merchandise as currency, so long as it accepted by the other party in the transaction, there are two metals that have, historically, always served well to meet this purpose. Those metals are gold and silver and there are a number of factors that make them peculiarly suited to be standards and measures of value, and to serve, when in the shape of coin, the purposes of a circulating medium:
The first is that they are divisible into extremely minute portions, and capable of being put back together without any noticeable loss of weight or value. This makes it easy to assign specific quantities of them to the value of any article or product that is being bought or sold.
The second is that they have a uniformity and sameness of quality all over the world, unlike other substances. For example, the difference in quality between saffron from Spain and saffron from elsewhere or cotton from Egypt as opposed to cotton from elsewhere, is well-known and readily apparent. However, one grain of pure gold is exactly similar to another, regardless of where it comes from, whether that be from the mines of South Africa or the goldfields of the Incas. Time, weather, and damp, have no power to alter its quality. The weight of any specific portion always equates exactly to its value: two grains of gold are always worth exactly twice as much as one.
The third is their durability and hardness: both gold and silver, especially when mixed with small quantities of alloy, are hard enough to resist very considerable friction, and are therefore fitted for rapid circulation. And furthermore, they are both inert and scarcely erode over long periods of time, even millenia. We still find intact gold coins from roman times and beyond.
The fourth is the fact that they are rare, thereby keeping their value to weight ratio high, but not so rare as to make it unfeasible to use them as a currency, for there is enough gold and silver to cover all transactions that need to be carried across the globe on a daily basis.
The fifth is that they are capable of receiving and bearing an official stamp, certifying the weight and degree of purity of any particular coin, thereby facilitating transactions and sparing transacting parties the need to weigh the coins every time they do business.
The sixth is that their value is fairly constant and changes little over time, being largely unaffected by fluctuations in supply and demand, unlike most other articles. One sheep today costs approximately one dinar, and one sheep in the time of the Prophet cost approximately one dinar.
And, finally, more than any of these factors, the thing that makes gold and silver most ideally suited to be our currency is that they are the two metals that the Muslim umma chose to make their currency and to be the means for the determination of wealth and the payment of zakat. It was these metals that the Messenger of Allah used as currency and it was these metals that he collected as zakat and distributed among the poor. And if there had been anything more suitable than them, he would have used them, for he came to show us the best way to live our lives in all its aspects.
None of our affairs can ever be straight until gold and silver once again become our means of exchange for upon them depend the validity of one of the five pillars of the deen, zakat, and only by means of them can we rid ourselves of the system of usury that has all trapped. So we ask Allah to give success to all those who are minting the dinar and dirham.
إِنَّ اللهَ وَمَلَائِكَتَهُ يُصَلُّونَ عَلَى النَّبِيِّ، يَا أَيُهَا الذِينَ آمَنُواْ صَلُّواْ عَلَيْهِ وَسَلِّمُواْ تَسْلِيماً. اللَّهُمَّ صَلِّ وَسَلِّمْ وَبَارِكْ عَلَيْهِ وَعَلَى آلِهِ وَصَحْبِهِ أَجْمَعِينَ.
وَارْضَ اللَّهُمَّ عَنِ الْخُلَفَاءِ الرَّاشِدِينَ أَبِي بَكْرٍ وَعُمَرَ وَعُثْمَانَ وَعَلِيٍّ، وَعَنْ سَائِرِ الصَّحَابَةِ أَجْمَعِينَ، خُصُوصاً اِلأَنْصَارَ مِنْهُمْ وَالمُهَاجِرِينَ، وَعَنِ التَّابِعِينَ وَتَابِعِي التَّابِعِينَ وَمَنْ تَبِعَهُمْ بِإِحْسَانٍ إِلَى يَوْمِ الدِّينِ.
اللَّهُمَّ اهْدِ وُلَاةَ أُمُورِ المُسْلِمِينَ لِمَا يُرْضِيكَ وَلِاتِّبَاعِ سُنَّةِ نَبِيِّكَ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ، وَثَبِّتْ أَقْدَامَهُمْ عَلَى الصِّرَاطِ المُسْتَقِيمِ، وَأَصْلِحْهُمْ يَا رَبَّ الْعَالَمِينَ.
اللَّهُمَّ بَارِكْ عَلَى شَيْخِنَا، وَعَلَى أَمِيرِنَا، وَعَلَى جَمِيعِ أُمَرَاءِ وَزُعَمَاءِ المُسْلِمِينَ.
اللَّهُمَّ بَارِكْ عَلَى المُسْلِمِينَ فِي هَذِهِ المَدِينَةِ، وَوَفِّقْهُمْ لِمَا تُحِبُّهُ وَتَرْضَاهُ يَا أَكْرَمَ الأَكْرَمِينَ.
اللَّهُمَّ أَعِزَّ الإِسْلَامَ وَالمُسِْلمِينَ (3) وَاخْذُلِ الْكُفْرَ وَالْكَافِرِينَ، وَانْصُرِ المُجَاهِدِينَ فِي سَبِيلِ اللهِ. وَاجْعَلْ كَلِمََتَكَ هِيَ العُلْيَا وَكَلِمَةَ الْكُفْرِ هِيَ السُّفْلَى.
رَبَّنَا ءَاتِنَا فِي الدُّنْيَا حَسَنَةً وَفِي الآخِرَةِ حَسَنَةً وَقَِنَا عَذَابَ النَّارِ.
اللَّهُمَّ لاَ تَدَعْ فِي مَقَامِنَا هَذَا ذَنْباً إِلاَّ غَفَرْتَهُ، وَلاَ عَيْباً إِلاَّ سَتَرْتَهُ، وَلاَ مَرِيضاً إِلاَّ شَفَيْتَهُ وَعَافَيْتَهُ، وَلاَ مَسْجُوناً إِلاَّ طَلَقْتَ سَرَاحَهُ، وَلاَ مُسَافِراً فِي بَرِّكَ وَبَحْرِكَ إِلاَّ سَلِِمْتَهُ وَغَنِمْتَهُ.
إِنَّ اللهَ يَامُرُ بِالْعَدْلِ وَالإِحْسَانِ وَإِيتَاءِ ذِي الْقُرْبَى، وَيَنْهَى عَنِ الْفَحْشَاءِ وَالمُنكَرِ وَالْبَغْيِ، يَعِظُكُمْ لَعَلَّكُمْ تَذَّكَّرُونَ، وَلَذِكْرُ اللهِ أَكْبَرُ وَاللهُ يَعْلَمُ مَا تَصْنَعُونَ. وَقُومُواْ إِلَى صَلاتِكُمْ يَرْحَمُكُمُ اللهُ.