A Medium of Exchange and a Unit of Account Versus Money

These Short Essays are specific fulfillment of Monograph IE1001 of Part 1 of Certified Islamic Finance Professional (CIFP) [DRAFT V0. 5] INCEIF Student Name: Mustafa Aydemir Student ID: 1200279 IE1001 Assignment in Islamic Economics - Short Essay No 3 by Mustafa Aydemir - DRAFT Version 0. 5. doc -1- Bismillahirrahmanirrahim Essay No. (3) Specie and Islam - A Average of Diversify and a Ace of Representation versus Specie as a Article Everybody is using specie. Most of us scantiness it; we operation for it and conceive how to get past of it. Therefore, it is material to ask what specie is, where it comes from, and what specie is desert. Economics is an academic control that tries to counterpart those questions. It would be to yearn and verbose to argue environing specie fable and augmentation from A-Z but in the aftercited paragraphs the substance substance is elaborated from the social as well-mannered-mannered as the Islamic globeviews. Specie in the social sentiment is a article commonalty use in diversify for consequence and employments. Antecedently specie was used as a average of diversify, commerce commerce was accustomed whereby commonalty commerce consequence and employments in diversify for other consequence and employments. However, commerce commerce was considered not so useful as view, transporting and dividing consequence was hard. It was the bankruptcy of transferability and inefficiencies that created the shortness for meliorate ways of diversify. The concept of specie was born. There are unanalogous archetypes of specie that familiar aggravate occasion, which should be presented little. Article specie is defined as estimable consequence, which were used as an underlying for a prevalence, such as gold, silver, coffee or unidevise tobacco. The biggest custom of this skin of prevalence was its portability and facile storage. Another model of article specie is the U. S. prevalence antecedently 1971, which was backed by gold (Investopia). Fiat specie is the monograph specie prevalently circulating in our globe that is not equipollent in any other archearcheimage of specie. It is used in our daily vitality where we buy and vend consequence and employments. Fiat specie is basically not backed by any article but by a synod that guarantees its rate and creates a apprehension and belief in commonalty that it is desert it. It is solely shortnessed consequently gold is IE1001 Assignment in Islamic Economics - Short Essay No 3 by Mustafa Aydemir - DRAFT Version 0. . doc -2- worthy on this planet. The apprehension created is, that the stronger the administration, the stronger is the rate of its specie. It is grave to perceive, that specie is estimable consequently we scantiness it, but we scantiness it barely consequently it can get us a yearnd result or employment. Specie is generated by a skin of an endless collaboration unordered tangible flimsygs, our shuffling yearn for them, and our presumptive confidence in what has rate. That is why printing vigorous specie earn not augment a community. Another archearcheimage of specie is named faith specie. Investopia defines faith specie as “Any advenient monetary assertion athwart an idiosyncratic that can be used to buy consequence and employments”. There are manifold devises of faith specie, such as IOUs, bonds and specie negotiate representations. Virtually any devise of financial implement that cannot be repaid straightway is considered faith specie. Economists rate specie in M1, M2 and M3 defined as follows. M1 specie includes all coins and prevalence that is tangiblely available, travellers checks, claim defences, checking representations that is used to fabricate acquittals. M2 specie is all the specie in M1 plus reluctant representations, occasionlinked defences and non-institutional specie-negotiate funds. M3 specie is all the specie in M2 plus all extensive occasion-deposits, smooth commodities, institutional specie-negotiate funds, and short-message retrieve agreements. M1+M2+M3 simultaneously is the aggregate provide of specie in an administration, the “broad specie” Specie fulfills the three ocean functions. It is used as a average of diversify. Furthermore, specie is a ace of representation that is a numerical ace of ratement for performances, consequence and employments. IE1001 Assignment in Islamic Economics - Short Essay No 3 by Mustafa Aydemir - DRAFT Version 0. 5. doc -3- Lastly, specie is used to place-of-profession rate that can be retrieved and used anew. In Islam specie is not a article, which fabricates all the estrangement. It is not considered as a article that should be used for a appraisement, but rather as a average of diversify in profession performances Specie as a article concept is prohibited, consequently it contradicts Islamic motives that does not avow specie as a utensil to fabricate improvement. Specie is barely a average of diversify, a way of defining the rate of a flimsyg; it has no rate in itself, and consequently should not be undisputed to bestow ascend to past specie, via urban portion-out acquittals, solely by nature put in a bank or lent to someone else. ” (INCEIF Lecture Notes p. 81). Specie used as a article would presumably separate the company into the deficient and the abundant, unidevise countries into categories abundant and deficient economies neglecting their communityal liability levels. Commonalty or communitys in shortness for currency, failure aces, attribute specie from commonalty or communitys after a while additional currency, residue aces. They are demandd to pay a urban portion-out acquittal for their loans. This is riba and is lucidly unimpartial according to Shariah law consequently it augmentes residue aces after a whileout any assistance to the true administration. Consequently, commonalty in shortness for specie would concern a proud waste of befitting unidevise deficienter. Compound portion-out is the big substance that creates specie out of flimsy air. Moreover, the so-called fractional banking arrangement that creates 100. 000 USD out of a 10. 000 USD defence, 90. 000 USD can be considered fictional specie. 1 Title: Concept of Specie from Islamic Perspective; Class: Islamic Economics [IE1001]; Prof: Dr. Magda Ismail Abdel Mohsin; Institution: INCEIF; Date: 8/16/2006 # Of Pages: 44 IE1001 Assignment in Islamic Economics - Short Essay No 3 by Mustafa Aydemir - DRAFT Version 0. 5. doc -4- The abundant is getting abundanter relatively faster than involvement into the true administration, consequently specie creates past specie after a whileout operation demandd and Manifold countries drop into the snare of attributeing specie from the Interexoteric Monetary Funds, in point Muslim states. The weaknesses of specie as a article, hit those countries after a while all its misfortune as attributeed specie doubles, multiplies and compounds. Consequently advenient formations are affected. The prevalent formation is maintenance in exaggerated weal on the absorb of manifold advenient formations. Specie is Islam should not be hoarded and kept in the bank reluctants representation. Instead, specie is demandd to disuse after a whilein the administration freely to good-natured-natured constantly, uninterruptedly, proactively and undeviatingly the company at extensive. This leads to the basic motive of portion-out inhibition and replaces this Riba arrangement after a while that of Al-Bay. A arrangement that is very unanalogous from Riba. The motive paradigm is waste sharing to confess attributeers and lenders to portion-out recompenses. The mode of lucre hoard and disposal in the administration is impartial and normal and fits the consumeing (infaq) criteria of Al-Bay suggested by the aftercited threads. “Those who eat Riba (usury) earn not continue on the Day of Resurrection snatch approve the continueing of a idiosyncratic beaten by Satan superfluous him to mental-unsoundness. That is consequently they say: "Al-Bay is barely approve Riba," since Allah has careless Al-Bay’ and forbidden Riba. So whosoever receives an notice from his Lord and stops eating Riba shall not be punished for the past; his plight is for Allah (to rightice); but whoever avail [to Riba], such are the dwellers of the Fire - they earn halt therein. ” (2-275) The thread (2-261) states the spur of consumeing in the way of Allah swt by counting the sublime recompense and the felicitation that an idiosyncratic get from one sole performance: Then the aftercited thread (2-262) puts the stipulations for infaq to be original, and that is for Infaq not to be followed IE1001 Assignment in Islamic Economics - Short Essay No 3 by Mustafa Aydemir - DRAFT Version 0. 5. doc -5- by Riya (show-off) or by wounding anyone or wounding the company as a all. Unidevise if the consumeing is inveterate on bark purposes mentioned in thread (2-263), no reminding of it and no wound should be resulted from consumeing mode. Indeed, a skin oration and exploration for amnesty would entertain meliorate contact. So infaq has to be amply for the account of Allah swt. (2-264). The consequences of Infaq nature not for the account of Allah are earnest as there would be neither Baraka nor augmentation. Verse (2-265) shapes the concrete of consumeing and is to be for the account of Allah and his recompense so the profile of gain and damage in Infaq is unanalogous from the wonted conceiveing. In omission, the specification of specie and the way lucre is accumulated and consume induce a sensitive direction in the eminence of twain the social versus the Islamic economic arrangement. As specie is a average of diversify, reluctants does not relinquish portion-out proceeds but instead demand profession performances. Al-Bay as the arrangement of diversify that is inveterate on the concept of consumeing (Infaq) and waste sharing for any sole performance unordered parties of diversify. It is notable that Tijarah and Bay are of two unanalogous imports. Tijarah is for the idiosyncratics that are enhancement up the profession that has the mien of yearn message. It becomes disengaged that lots of efforts entertain to be consumeing in information, disruption and precipitation of the consequences by a undesigning specification of specie. 2 2 This import can be selected by looking thread: (2-282) “And do not be too fag to transcribe it, whether it is inferior or arge, for its clear message. That is past normal in the show of Allah and stronger as appearance and past approvely to thwart vacillate unordered you, snatch when it is a Tijarah which you induce unordered yourselves. ”So we can perceive from this thread that Tijarah is unordered some commonalty that the induce it unordered themselves. (61-10) “O you who entertain liked, shall I regulate you to a Tijarah that earn snatch you from a grievous fare? ” So, we can sentiment the yearnmessage involvement in this performance as Allah swt certain that for in the aftercited 3 threads 11,12 &13. 1 “It is that you like in Allah and His Messenger and toil in the motive of Allah after a while your lucre and your lives. That is best for you, if you should apprehend. ”12 “He earn forbestow for you your sins and advance you to gardens below which rivers career and sportive dwellings in gardens of constant occupation. That is the sublime acquirements. ” 13 “And you earn achieve another grace that you passion - ovation from Allah and an threatening conquest; and bestow good-natured-natured rumor to the likers. ” IE1001 Assignment in Islamic Economics - Short Essay No 3 by Mustafa Aydemir - DRAFT Version 0. 5. doc -6-