RESOLUTION
NO. (59/10/6)
CONCERNING "THE FINANCIAL
MARKETS"
Quote-The Council of the Islamic Fiqh
Academy, in its sixth session, held
in Jeddah, Kingdom of
Saudi Arabia, from 17 to 23 Sha'baan,1410H
(corresponding
to 14 - 20 March, 1990),
After having studied the papers
and recommendations presented and
conclusions reached at in the
seminar held in Rabat(Morocco) on 20-24
Rabi'ul Thani 1410 H
(October 20-24, 1989) on the subject of "Financial
markets",
in cooperation between the Academy and the Islamic Research and
Training Institute(IRTI) of the Islamic Development Bank, and
hosted by the
Ministry of Endowments and Islamic Affairs of the
Kingdom of Morocco.
And in the light of the rule recognized in
Shari'a that encouragement
should be directed towards lawful
earning and investment of savings through
Islamic modes of
investment based on the principle of sharing burdens and
bearing
the risks of liabilities,
And in view of the vital role
played by the financial markets in
mobilizing the economy and
stimulating the investment operations,
And realizing the fact
that giving due importance to these markets and
studying their
problems in the light of Shari'a can fulfill the need of
introducing
the guidance of Islamic Fiqh to the contemporary problems, and
it
conforms to the efforts exerted by Muslim jurists in explaining the
rulings of Shari'a on financial transactions, and particularly on
the
principles governing the market and the system of
"Hisbah" introduced to
supervise the market
operation; and that an equal importance should be
given to the
"secondary markets" which facilitate to investors the
re-entry
to initial markets and provide access to liquidity, and
encourage
investment by promoting confidence in the investors
that they can leave the
markets whenever they need to do so.
And
after studying the papers presented to explain the working system of
the existing financial markets, their procedure and the different
instruments used therein,
RESOLVES
First:The
financial markets should be given due importance in order to
discharge the obligation of preserving capital and ensuring its
growth,
because it leads to fulfill the general human needs and
discharge the
spiritual and material duties relating to
capital.
Second:Although the original concept of financial markets
is sound and its
application is very much needed in the present
day context yet their
existing structure does not present an
example to carry out the objective
of investment and growth of
capital within the Islamic framework. This
situation
requires serious academic efforts to be undertaken in
collaboration
between the "Fuqaha" (Muslims jurists) and the economists,
so
that it may be possible to review the existing systems with
its procedure
and instruments and to amend what needs amendment
in the light of the
recognized principles of Shari'a.
Third:The
financial markets are established through administrative and
certain
procedural systems and the adoption of these systems can be
attributed to the rules of general expediency ("Al Masalih
Al-Mursalah")
which is a recognized principle in Shariah and
does not contravene any of
its injunctions or principles.
It relates therefore to the regulation
introduced by the
authorities of the State, in order to organize
professions and
public utility services. If such regulations are carried
out
in complete confromity with the Islamic principles and injunctions,
no
one has the right to violate them or to seek devices to
circumvent them.
And recommends:
To provide a complete
picture by conducting adequate research and studies
from Fiqh and
economic perspectives on the instruments and modes used in
financial
markets.
Verily, Allah is All-Knowing Unquote
(Please
refer Resolution No. 63)
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