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Money creation and control from Islamic perspective


  • Hasan, Zubair


This paper deals with familiar facts in monetary economics from an unfamiliar angle. It argues that it is not factual to regard the legal tender money and bank credit as of different genus: they work in tandem to the same ends in an economy, conventional or Islamic. Also, it does not matter what serves as money – solid gold or flimsy paper – for keeping its value stable; only the blind would argue that staff is indispensable for walking. Money is just an instrument: it was never nor can ever be classified into Islamic and non-Islamic. What it does – good or bad – depends on how we use it. Money does not generate crises; its mismanagement does. It follows that the refuge the world is searching today from recurring financial crises does not lie in money substance: history testifies that national economies could not remain turmoil-free during the centuries of the yellow metal sway over the monetary scene. The paper concludes that it is the human factor that has been the source of good or evil for mankind including money matters. And the quality of human factor true religion can alone improve: morality without faith is rudderless.

Suggested Citation

  • Hasan, Zubair, 2011. "Money creation and control from Islamic perspective," MPRA Paper 39796, University Library of Munich, Germany, revised 21 Dec 2011.
  • Handle: RePEc:pra:mprapa:39796

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    References listed on IDEAS

    1. Cizakca, Murat, 2010. "The case against the Islamic gold dinar," MPRA Paper 26645, University Library of Munich, Germany.
    2. Laurent Weill, 2009. "Do Islamic Banks Have Greater Market Power ?," Working Papers of LaRGE Research Center 2009-02, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    3. Zubair Hasan, 2008. "Credit creation and control: an unresolved issue in Islamic banking," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 1(1), pages 69-81, April.
    4. Gary Gorton & Lixin Huang, 2002. "Banking Panics and the Origin of Central Banking," NBER Working Papers 9137, National Bureau of Economic Research, Inc.
    5. Hasan, Zubair, 2009. "Profit sharing ratios in mudaraba contract revisited," MPRA Paper 21843, University Library of Munich, Germany, revised 2010.
    6. Hasan, Zubair, 2007. "Ensuring exchange rate stability: Is return to gold (Dinar)possible?," MPRA Paper 8134, University Library of Munich, Germany.
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    Cited by:

    1. Hasan, Zubair, 2012. "Money evolution and control in the context of current financial crisis with Islamic inputs," MPRA Paper 73532, University Library of Munich, Germany, revised 2013.

    More about this item


    Key words: Monetary policies; Gold standard; managed currency; Islamic banking; Central banks;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School


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