Concerning the Islamic Prohibition of Using Paper-Money as a Medium of Exchange

GRANADA, 18th of August of 1991.

The proof of this prohibition of usury comes from the book of Allah :

"Allah has permitted trade and forbidden usury"
(Quran, 2, 275)

Allah has forbidden usury, and therefore all the transactions which fall under this category are all forbidden by Allah. Imam Malik said:

"Whatever makes a sale halal makes it halal and whatever makes a sale haram makes it haram"
("Al-Muwatta", Book of Commercial Transactions, 49)

We are going to prove, Inshaallah, that the use of paper-money makes the transaction usurious and haram and consequently we will declare that the use of paper-money is haram.

This Fatwa consist of 4 parts:

Before we enter into a proper analysis of what paper-money is, we will examine the law to undertand what Allah has made haram, namely usury, so that we will be able to identify it.

1. The Nature of Usury

Then we will examine the nature of paper money

2. What is paper-money?

Then we will arrive at a decision on the matter


And finally we will examine how can we implement the fatwa


The Nature of Usury

Usury in Arabic means increment, excess. The definition of usury by Qadi Abu Bakr Ibn al-'Arabi in his "Ahkamul'Qur'an" is:

"Usury (Riba) is any unjustified increment by its countervalue ('iwadun)"

Another form of expressing the same is:

"Usury is any unjustified increment between the value of the goods given and the countervalue of the goods received"

Definitions: What is the thing that is increased in such a usurious contract? What is increased in the usurious contract is not merely the quantity, like for example, the weight of one good against the other.We will call this caracteristic of the goods: value (qimah). Value includes the quantity and quality of the goods, and also is a reflection of a free market and it is the reflection of a just transaction. Goods ('ard) is anything containing wealth in general that can be sold or bought, including merchandises and the particial use of rentable merchandises. The value of goods is the comparative relation with some other goods in a just commercial transaction (bay'). Value is each one of the two relations between two equivalent parts:

The value of A is B: A=B

The value of B is A: B=A


Note for people miseducated in a Faculty of Economics:

The kafirs speak of value as a subjective/objective representation. Value is sometimes represented by a concept of subjective utility (Galiani), sometimes by objective labor (Smith, Ricardo), sometimes represented by abstract labor (Marx), sometimes by numerical data (Samuelson). Value is not something psychical, is not a concept. To evaluate is a human act, and an act only exists in its performance. Evaluation exists only in the instant when two parties exchange goods within certain existential conditions that make the exchange equivalent. And these conditions are the matter of Islamic Jurisprudence.


We warn all Muslims against the spread of the kafir doctrines of Karl Marx among ourselves, sometimes through the influence of munafiqun and ignorant people. Karl Marx was a Jew of a very important rabbinical family in Germany. The core and basis of his doctrine is called: the doctrine of surplusvalue (Mehrwert, in the original German), which for Marx was like robbery. Surplusvalue could literally be translated in Arabic (a semitic language like hebrew) as Riba. Usury comes from latin. Surplusvalue is a literal translation of the semitic word which means usury. If we realise that surplusvalue 'means' usury, we can see how Marx then twisted the meaning. Where we say making profit in one transaction is usury, he said it is not usury (surplusvalue) and is acceptable (halal). And where we say making profit in between two transaction is trade and is halal, he said is usury (surplusvalue) and is unacceptable (haram). Marx twisted the meaning of usury to its opposite.


What is paper-money?

What we know today as paper money is the result of an historical evolution. And it is still evolving*. Paper money in history has passed through different stages, in which paper-money has adopted different natures therefore has been understood in different ways.


Paper money is a creation of the Kufr of the West and it is not the creation of Islam. It was then introduce in the Muslim land through the colonial and intellectual pressure of the kafirs, and the colaboration of some munafikun.

In the European Middle Ages money consisted of gold and silver, although generally altered by the kings. The use of paper money is already recorded, though limitedly in its use, between merchants and bankers in Italy in the XI century, and later on in Naples, Sweden, Cologne, Vienna or Granada from the XV century right up to the short attempts or experiments with paper money that happened in France during the XVIII century (John Law in 1720). This original use of paper-money must be distinguished from the use of paper money in the new country called United States, when a significant and fundamental change happened in the use of paper money: Paper money, the dollar, became the generalised and lasting medium of exchange. A third period must be distinguished after World War II when paper-money gradually became what it is today: a monopolised merchandise standing on its own, not representing other particular merchandise.



The establishment of the Bank of England had originated a new situation in relation to paper money. The bank created by Patterson had 72,000 pounds in gold and they lent 16.75 times more to the king of England (William of Orange) to finance his war against France. He lent the money at an annual interest of 8.25% so that it received 100,000 pounds a year of interest. Although he had only 72,000 pounds he received an interest of 100,000 a year, therefore, about 140% a year. When some people started to rumour that the Bank had not enough gold for all the receipts, the state, who needed them to finance the war, declared them legal money of the kingdom. By law the receipts had the same value as the gold that they represented. The debt became legal medium of exchange. The example was repeated successfully in other countries, until it reached its peak with the constitutional establishment of legal paper-money in U.S.A.


On the trading generally with receipts (debt):

The trading generally with debts, without being contained to particular cases, is usury and haram

Zayd ibn Thabit, one of the Companions of the Messenger of Allah, may Allah bless him and grant him peace, made haram the trading with receipts. He said it is usury.

Yahya related to me from Malik that he had heard that receipts were given to people in the time of Marwan ibn al-Hakm for the produce of the market at al-Jar. People bought and sold the receipts among themselves before they took delivery of the goods. Zayd ibn Thabit and one of the Companions of the Messenger of Allah, may Allah bless him and grant him peace, went to Marwan ibn al-Hakam and said, "Marwan! Do you make usury halal?" He said, I seek refuge with Allah! What is that?" He said, "These receipts [sukuukun] which people buy and sell before they take delivery of the goods." Marwan therefore sent guards to follow them and to take them from people's hands and return them to their owners.

("Al-Muwatta", Book of Commercial Transactions, 44)


Paper-money as a debt cannot be used as a medium of exchange. A debt is restricted to a private contract between two parts, and it should remain like that.

The general use of a debt in the exchanges is in most of the cases haram, and it is in general disapproved. It is only limitedly allowed in a private situation. Therefore the use of a debt as a medium of exchange is haram.


After examining the nature of paper money in all possible forms: as a debt (a promise to pay a merchandise or representing a merchandise) and as a merchandise, we have seen its use makes the transaction usurious.

Paper money cannot be accepted as a medium of exchange even if it represents a merchandise gold or silver, on a nominal and one to one basis. Even if that were the case it could not be used outside the closed circuit of depositor and receiver. Only on a private scale it can be transferred but may not circulate.

But if we consider that nowadays paper-money has become nothing but a pure symbol with no reality attached except the imposition of the law, then it is clear that the use of paper money is usury because:

- Its 'legal value' is an imposition by the state on the people and

- Its production is a limited monopoly by the same state that imposes it.

Without these two elements which are usurious conditions the value of the paper-money would be nothing.

Therefore we declare a Fatwa in Granada, for all the Muslims, by which:

After examining all the aspects of paper-money, in the Light of the Qur'an and the Sunna, we declare that the use of paper-money in any form of exchange is usury and is therefore haram. It is not permitted for the Muslim to accept or to give paper-money in a commercial transaction. It is an obligation on the Muslims to abandon usury and to introduce new media of exchange, or money, and the best way is to follow the sunna of the Messenger of Allah, salallau alaihi wa salaam, by using gold and silver, or any other merchandise commonly accepted as a medium of exchange.


"The use of paper-money in any form of exchange is usury and is therefore haram". This fatwa obliges all the Muslims to abandon the practice of usury in the form of using paper money as the medium of exchange. The understanding of this fatwa should not lead to the conclusion that therefore I can not take a taxi back home because I will have to pay the taxidriver with paper-money. This way of thinking is mockery with the intention of preventing you from doing anything serious about it. What one should understand is that money is not a personal matter, but it is common agreement among people. What one should do is to create an arena of people where you can agree to accept a different medium of exchange. This is a decision for a group, not a matter for a single individual.

We must understand that the introduction of paper-money as a medium of exchange among the Muslims has been a process of 200 years. We must understand that we have modelled and fashioned our ways of trading and our ways of living around the existence of paper-money. All this must change in order to be able to avoid the haram.


The "Islamic Bank" is a completely usurious institution used as a means to lure the Muslim who still reject the banks to enter in the banking system. The "Islamic Bank" is a Trojan horse in Dar al-Islam.

Note: a warning against the Modernist Movement and the allowance of usury

The inspiration behind the Modernist Movement is said to have been Jamal-ud-Din al Afgani (1839-1897), its brain was Muhammad 'Abdou (1845-1905) and the one who extended it was Rashid Reda (1865-1935). It appeared as a rejection of the colonialism, but their emotional rejection of the West was accompanied by a deep and not discriminated admiration of the West. This movement is responsible for the introduction of a false teaching that said banking and insurance transactions are not usury and are allowed in our Muslim community.

Muhammad 'Abdou because of his position - he was posted as Shaykh (Director) of the renowned University of Al-Azhar by Lord Cromer, Brithish Governor of Egypt - was the most damaging of all. His first fatwa as Shaykh al-Azhar was: "interest in saving funds is allowed". He wrote (5th of Dec. of 1903):

"The stipulated usury is not permisible in any case; whereas the Post Office invest monies taken from the people, which are not taken as loans based on need, it would be possible to apply the investment of such monies on the rules of a partnership in commendan"

("Al-Manar", vol. VI, part 18, pag. 717)

The door to the using of the banks and their banking money was therefore opened. The basis of the "Islamic Bank" had also been delineated by which the interest can be considered as if it were part of parnership in qirad.

Muhammad Rashid Reda was the founder of the magazine "Al-Manar" distributed around all the Muslim World. He participated in the same circle of people as Lord Cromer and 'Abdou. He opposed the traditional position of the Madhhabs to impose his own opinions. He also bitterly opposed the traditional Sufis. His opinions are clearly exposed in his writing:

"There is nothing in our religion which is incompatible with the current civilisation, especially those aspects regarded as useful by all civilised nations, except with regard to a few questions of usury [riba] and I am ready to sanction [from the point of view of the Shari'a] everything that the experience of the Europeans before us shows to be needed for the progress of the state in terms of the true Islam. But I must not confine myself to a school of law, only the Qur'an and the authentic Hadith" ("Al-Manar", vol. XII, p.239)

"Except with regard to a few questions of usury [riba]" What he meant by a "few questions" is for example that he saw nothing wrong with taking up a life insurance policy ("Al-Manar", vol. XXVII, pag. 346, also vol.VII, pags. 384-8, and vol. VIII, pag. 588). He also decries the jurists' misuse of Qiyas to extend to the area of prohibition on taking interest on capital and suggests that the taking of interest on monies left in the bank or post office does not come under the prohibited usury. ("Al-Manar", vol. VII, pag. 28).

The teaching of this people or other people who use their arguments in their judgement have to be rejected. With it the restoration of the traditional fiqh that clearly forbids usury in all its forms.


Some 'practical people' pretend that you cannot leave paper-money and the banks. But to abandon usury is not impossible, it is the easiest thing possible. Allah does not imposes on any soul a duty beyond that which it can bear. Allah has commanded us to two distinctive tasks:

1. The abandoning of usury

2. Fighting against those who practice usury

Abandoning usury is also the creation of a halal way of trading among ourselves, which does not involve any form of paper-money or other usurious practice. And fighting against the usurers is to destroy the means by which they practice usury using all the methods at hand (harb). Both of them must go together, we cannot promote the destruction of the usurious system if at the same time we do not provide an alternative. Equally we will not be able to succeed in establishing an Islamic market if we do not dismantle the fragile structure of the financial and usurious nexus. This is the future fight of the Muslims.

The Creation of an Islamic Market

The Path towards the Islamic Market should be a progressive, systematic, and strategic abandoning of the usurious system.

•The first step is education. Knowledge of the basic rules of the Islamic Market: the basis of qirad, a commercial transaction, what is riba... This is essential because this knowledge is practically lost. Most of the Muslims have adopted the ways of the kafir, and have complete ignorance of how this could be done Islamically.

•Second it is obligatory take on the fard of chosing an Emir in every community of Muslims to whom all of them give oath of alliance (the bai'at). The Emir is the seal of the community, gathers the people together and pursues justice in the controversies of the community.

•Third we should start implementing strategically the Law, this could be carried out in three stages

a] Minting of coins: gold, silver, copper, or anything commonly accepted. This is for us real money. The sunna of the Messenger of Allah was to use gold and silver as the main medium of exchange

b] Establishment of Muslim Fairs or Markets. Putting the coins in circulation, among the people who will agree to keep them in circulation (and not keeping them). Thus condition of the Trade Fairs among Muslims will be to deal with the real coins and not with paper. The Market should proliferate in different communities, until we are able to establish permanent ones in every Muslim community under the authority of an Emir.


The Destruction of the Usurious System

To impose the supremacy of our deen to Kufr is an obligation for the Muslims. Allah has made Jihad fisabilillah, halal for the Muslims. To fight fisabilillah, the first condition is that the banner of Islam must be raised high, it cannot be done by secret organizations. Kufr cannot be fought with the weapons of kufr, the military struggle cannot succeed unless we stop paying a usurious tribute to the kuffar.

The first struggle against kufr, should be against their usurious (financial and monetary) system. The usurious system of money and finance is the weakest part of their system, because it is based on pure fantasy. The enourmous debts of the countries and the even bigger debt of the individual persons to the banks DOES NOT EXIST on paper. It is pure computer data. It is like a magic. As long as people believe that this system has a reality, they will find themselves prisoner of its demands and ways. The moment they realise that the wealth is in themselves and that they do not need this usurious system, the system will collapse. Collapse is the inevitable destiny of the usurious system, because Allah has declare his war against those who follow it. In the meanwhile a group of totally commited Muslims will take on their duty to use strength and wealth to spoil and to destroy the usurious system.


The events of recent History reveal that the fight against the kufr cannot yet take place in the battlefield, they are prepared for this in the most extraordinary way, that they can kill without being present. This is the kind of battle they are expecting. But our battle is global, and clearly oriented to their weakest point.

It is necessary to form small groups, with the authority of one Emir, to fulfill this obligation of the Muslims. The first step of these groups is that they must swear absolute allegiance among themselves for the purpose of the ghazwat. They must then study the best strategy to have success. And then commit themselves to the action.

About the targets the Shaykh has said:

"It should be remembered that in the early phase of the Jihad, raiding should be on targets of all who participate in the haram usurious practice, and that the jews have enhanced their power, that is, the worthless paper-money, by their own hoards of wealth, through control of the diamond and the gold markets, and that these centres of hoarded wealth are among the necessary first targets to finance the larger struggle"

("The Sign of the Sword", p. 63)

The Islamic future will inevitably target computer systems, and erase debt information of major banks all over the world. Enter into their system and transfer money at random, or to a particular accounts that we can use. Alter the information in a way that they cannot reconstruct it. To do that we are in an excellent position because all Muslim are potential mujahidin. And nowadays the Muslims, whether it is correct or incorrect, are everywhere inside the whole of the usurious system. This Muslims and their expertise are our weapons. Weapons are not tanks nowadays. Weapons are technical knowledge and people with access to information. We have all that we need within our Muslim Umma.

The computer networks are being infiltrated everyday. In many cases by young boys for the purpose of playing. This weakness is growing and growing as their greed grows. It means that a free spirit and conviction is the most powerful of all guarantees of success.

Our businessman have also a task to do. They have their own networks of people who trust, and have access to very valuable information. The only thing they have to do is stop being naive about the bank and the financial institution. They should not play the role of victims with them. Do not admit their conditions and rules, but play with them at your favour. They have to change the mentality. They should prepare themselves within their rules to take from the enemy. Create companies in a vacuum and absorb debt that will never be paid back, create different financial identities to avoid the control and taxation of the state, use everything you know to take from them and sabotage them.

These teams of truly Muslim Mujahedeen, should appear everywhere. Not only one head, but we should be many heads. As the Shaykh says:

"It follows that one should strike at the place not expected. By extension, in the light of the current situation, one may strike at several centres all at the same time, thus causing havoc in the enemy and their response."

("The Sign of the Sword", p. 63)

The election of the targets has to be ordered by their priority in relation to the total struggle against Kufr. We should not fell into the temptation of chosing those which seem easier, but rather we should chose those which are more effective against the usurious system. We should also remember that although the booty in Jihad is halal for the Muslims, this is not the purpose of the fight. The purpose is to make Kufr surrender to the deen of Islam. Therefore the first targets must be the bigger targets, even if they take longer to get organized. So that they can be delitated, and you introduce chaos in their usurious system. We should use the surprise, to hit in their key communications centers and to their key people. And once the first targets are covered we should move to the smaller ones.

We call you all Muslims with an Amir to the struggle fisabilillah against the usurious system! These are just simple examples of how things can be done. Victory is certain if we fight fisabilillah. Therefore fisabilillah must be our constant remembrance. Victory belongs to Allah.

The Book of Allah:

"Allah imposes not on any soul a duty greater than it can bear. For it gets every good that it earns, and it suffers every ill that it earns. Our Lord! Punish us not if we forget or make a mistake. Our Lord! Do not lay on us a burden as You laid on those before us. Our Lord! Lay not on us a burden greater than we have strength to bear. And pardon us! And grant us protection! And have mercy on us! You are our Protection! So grant us victory over the disbelieving people"

(Quran, 2, 286)

* It is evolving from its paper form towards an electronic form representing some hipothetical unit of money, as the universal and unique the medium of exchange.