Chapter: Zakah on Gold and Silver

His statement, “the two currencies”: this is the dual form of naqd (currency), meaning that which is paid out, for naqd means payment. Gold and silver are not themselves a payment; rather, they are the means by which payment is made, being used to pay in buying and selling.

What is meant by “the two currencies” is gold and silver. Accordingly, fulūs (base-metal coinage) are not considered currency in the terminology of the jurists, because they are neither gold nor silver. Hence, the scholars differed as to whether usury applies to them or not; whether zakah is due on them unconditionally; or whether they are trade goods, such that zakah is due on them if they are intended for trade, but not otherwise.

Thus, there are two issues here, both of them momentous matters requiring deep analysis.

It is well known that paper money is regarded as fulūs, because it serves as a substitute for the two currencies and is used to exchange for the two currencies—gold and silver.

Some scholars held that fulūs are trade goods. On this view, zakah is not obligatory on them unless they are set aside for trade. Thus, if a person possessed one million qirsh, no zakah would be due from him. And if he exchanged ten of this coinage for twenty, it would be permissible, whether he took possession of it during the contractual session or possession was delayed—just as it is permissible to exchange one garment for two, even if possession is delayed.

But if we were to adopt this view, then most merchants today who have liquid cash in dirhams would not be liable for zakah, and the banks would not be usurious;