RESOLUTION NO. 75/6/8

CONCERNING CURRENCY ISSUES

Quote-The Council of the Islamic Fiqh Academy, holding its eight session, in Bandar Seri Begawan, Brunei Darussalam, from 1 to 7 Muharram,1414H (21-27 June 1993).

Having considered the research papers received by the Academy as the subject “Currency issues”.

Having listened to the debates on the subject.

RESOLVES

First: Work statues, rules and regulations, and employment contracts may include definition of remuneration in currency figures provided these are duly indexed, with the provided that the Indexation should not be prejudicial to the national economy. Indexation in this context means periodical adjustment of salaries in line with the progression of the cost of living as may be assessed by the relevant and expert authority. Such adjustment aims at protecting the workers currency payments wages against any decrease in the purchasing power that the wages afford due to currency inflation and any consequent increase in the general cost of commodities and services.

For indeed the governing principle with regard to conditions of contracts is that they are permissible, excepting those that authorize something prohibited (Haram) so prohibit something authorized (Halal).

In case of overdue salaries, the aggregate debt thus accumulated becomes subject to the provisions applicable to debts as stipulated in, the Academy’s’ Resolution No. 42/4/5.

Second: The creditor and debtor may agree on the day of settlement but not before - to the settlement of the debt in a currency other than the one specified for the debt, provided the rate of exchange applied is that applicable on the settlement date. Similarly, for debts due in installments in a specific currency, the parties may agree on the day of settlement of any installment, to have it effected, in full, in a different currency at the prevailing rate exchange on the date f settlement. A conditional requirement in all cases is that no part of the amount subject of the currency exchange should remain outstanding, with due consideration to the Academy’s Resolution No. 50/1/6.

Third: The two parties to the contract may, at the time of contacting, agree to the settlement of the deferred cost or salary in a specific currency to be settled in single payment or in several well defined installments in a variety of currencies or against a given amount of gold, the settlement may also be made as indicated in the item above.

Fourth: A debt contracted in a specific currency should not be recorded against the debtor in its counter value in gold or other currencies because such a practice would make it compulsory to the debtor to settle the debt in gold or the other currency, as agreed upon for the settlement.

Fifth: To reiterate Resolution No. 42/4/5 issued by the Academy concerning fluctuation in currency value.

THE COUNCILS RECOMMENDS THAT:

The General Secretariat of the Academy shall assign to a number of competent Shari’a and economics researchers known for their attachment to Islamic thought, to undertake an in-depth study of the other currency related issues, to be submitted for consideration at future sessions of the Academy, God willing. Such issues may include;

a) The possibility of using a hypothetical currency such as the Islamic Diner, and particularly as regards the Islamic Development Bank’s transactions, for the extension and redemption of loans, as well as for the determination of term-loans to be settled at the equationary rate between the hypothetical currency in question and the foreign currency in which the settlement is to be effected, such as US Dollars.

b)      Alternative Shari’a ways for indexing deferred remuneration’s to the standard average, level of prices.
c)      The concept of stagnation of currency notes and its effect on defining deferred rights and dues.
d)      Inflation thresholds at which currency notes are considered as stagnant.

Allah, though, knows best-unquote

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