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At the time the contract is made, the two parties may agree that the deferred price—or the deferred rent—be denominated in one of the following ways: (i) a single currency payable in one lump sum; (ii) specified instalments in several different currencies; or (iii) a set quantity of gold. Repayment is then to proceed exactly as agreed. It is likewise permissible for settlement to take place in the manner described in the preceding clause.
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When a debt has been incurred in a particular currency, it is not permissible to record that debt in the debtor’s liability as the equivalent value of that currency in gold or in another currency, thereby obligating the debtor to discharge the debt in gold or in the other agreed-upon currency.
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The Academy reaffirms Resolution No. (4/D5) concerning changes in the value of currency.
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The Council of the Academy requests the General Secretariat to commission qualified specialists—Sharia scholars and economists committed to Islamic principles—to prepare in-depth studies on the remaining issues related to currency, so that they may be discussed at future sessions of the Academy, God willing. Among these topics are:
(a) The feasibility of employing a notional currency such as the Islamic dinar, particularly in the transactions of the Islamic Development Bank, so that loans may be extended and repaid on that basis. Deferred debts would likewise be fixed and later settled according to the prevailing parity between that notional currency, in view of its value, and the foreign currency selected for payment, such as the U.S. dollar.
(b) Sharia-compliant alternatives to indexing deferred debts to the standard average price level.
(c) The concept of stagnation (kasād) of paper money and its impact on determining future rights and obligations.
(d) The threshold of inflation at which paper money may be deemed stagnant currency.
May Allah bless our master Muhammad, and his family and Companions.