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11 – 20 of 166Ahamed Kameel, Mydin Meera and Moussa Larbani
Having argued in the part I paper that the interest‐based fiat monetary system is not compatible with the objectives of the Islamic law or the Shariah, this paper seeks to argue…
Abstract
Purpose
Having argued in the part I paper that the interest‐based fiat monetary system is not compatible with the objectives of the Islamic law or the Shariah, this paper seeks to argue why commodity moneys, like the gold dinar and silver dirham, are compatible with the maqasid.
Design/methodology/approach
This is a theoretical paper that integrates information from the Qur’an, the traditions of the Prophet, the writings of early Islamic scholars and historical observations vis‐à‐vis the objectives or the maqasid al‐Shariah and makes logical deductions therefrom.
Findings
The theoretical conclusion is that while fiat money is counterproductive to the maqasid al‐Shariah, commodity moneys like the gold dinar and silver dirham, are indeed compatible with the maqasid. The Islamic economic system is, therefore, fundamentally a “barter” system, i.e. an exchange economy where goods and services are exchanged value for value, but avoids the problems associated with barter by taking some of the commodities exchanged in the economy, that have the characteristics of money, as money. Gold is argued to be the best Shari’ah money.
Research limitations/implications
Empirical investigations may shed further light.
Practical implications
If the theoretical deductions and contentions of the paper are correct, then their practical implications cannot simply be understated. For the Islamic economic system to emerge in reality, or for that matter any process of Islamization of knowledge/disciplines to succeed, it is foremost crucial that commodity moneys gradually replace fiat money.
Originality/value
The paper establishes that commodity moneys like gold and silver are Shariah‐compatible moneys, whereas the current fiat money is not.
Sugata Ghosh and Iannis A. Mourmouras
This paper examines the effects of money financing of deficits on capital accumulation and growth in a framework where inflationary finance is determined endogenously through a…
Abstract
This paper examines the effects of money financing of deficits on capital accumulation and growth in a framework where inflationary finance is determined endogenously through a dynamic game between an optimising central bank which attempts to minimise the inflation‐tax and a rational private sector, and this in turn determines the long‐run growth rate of the economy. We use dynamic programming to derive the time‐consistent equilibrium, which has intuitive properties. Our results indicate clearly that the inflation tax and the long‐run growth rate are negatively related.
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Azhar Mohamad and Imtiaz Mohammad Sifat
This paper aims to delve in an aspect of monetary economics, addressing its Islamic wing in general and dinar advocates in particular.
Abstract
Purpose
This paper aims to delve in an aspect of monetary economics, addressing its Islamic wing in general and dinar advocates in particular.
Design/methodology/approach
The paper argues that calls to reinstitution of dinar currencies are not only anachronistic and unnecessary but also counter-productive and potentially un-Islamic.
Findings
The paper further posits that regardless of the nature of economy, legal tender fiat money and bank money are of the same genus, and treating them otherwise is not consistent with Islamic jurisprudential precepts.
Originality/value
The study also highlights that mismanagement, avarice and human follies are to blame for financial maladies; regression to metallic currency is a panacea to neither the conundrums nor Islamic.
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This chapter introduces the concept of stablecoins such as Tether, DAI, or Ampleforth. It also provides a taxonomy of the different types of stablecoins consisting of (1…
Abstract
This chapter introduces the concept of stablecoins such as Tether, DAI, or Ampleforth. It also provides a taxonomy of the different types of stablecoins consisting of (1) traditional asset-backed stablecoins, (2) crypto-collateralized stablecoins, and (3) algorithmic stablecoins and seigniorage shares. The chapter continues with a brief history of stablecoins, starting from BitShares as the first stablecoin implementation over tether and market-wide stablecoin adoption to Facebook-initiated Diem. Next, the chapter explains the impact of stablecoins on cryptocurrencies and other markets and discusses trends and challenges facing stablecoins. The chapter provides a basic understanding of stablecoins, their defining characteristics, challenges, and markets.
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This study aims to evaluate the role of the prevailing currency systems in achieving (or departing from) the socio-economic objectives of a progressive and just society; i.e…
Abstract
Purpose
This study aims to evaluate the role of the prevailing currency systems in achieving (or departing from) the socio-economic objectives of a progressive and just society; i.e. featuring stability and equitable distribution of wealth.
Design/methodology/approach
After documenting historical developments in currency systems, the study reviews the Islamic perspective on the matter. Features of an ideal currency system are listed and then a critical evaluation of existing currency systems – fiat, banking and cryptocurrency – is undertaken.
Findings
It is found that existing currency systems – fiat, banking and cryptocurrency – are not compatible with the socio-economic objectives of a forward-looking, progressive society, which upholds transparency and justice as its core values. The study documents that Sharīʿah norms have no preference or dislike for any of the existing currency systems. Any prudent currency system compatible with the objectives of the Islamic financial system (i.e. stability and equitable distribution of wealth) is acceptable. A single international reserve currency (with country-specific legal tendering) is subject to the risk of destabilisation across global markets.
Practical implications
This paper recommends autonomy of central banking, the spending of seigniorage for the welfare of community members, development of asset-backed currencies (following ṣukūk structures), as well as multiple international reserve currencies and joining of hands by professionals and Sharīʿah scholars to design a currency system compatible with the Islamic financial system. This paper’s recommendation is against the adoption of cryptocurrency that lacks the backing of real assets.
Originality/value
The study contributes to the literature by evaluating the compatibility of existing currency systems in the achievement of socio-economic objectives of a welfare state which seeks to uphold justice and equitable resource distribution as core values in the financial system.
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Ansgar Belke and Edoardo Beretta
The paper explores the precarious balance between modernizing monetary systems by means of digital currencies (either issued by the central bank itself or independently) and…
Abstract
Purpose
The paper explores the precarious balance between modernizing monetary systems by means of digital currencies (either issued by the central bank itself or independently) and safeguarding financial stability as also ensured by tangible payment (and saving) instruments like paper money.
Design/methodology/approach
Which aspects of modern payment systems could contribute to improve the way of functioning of today's globalized economy? And, which might even threaten the above-mentioned instable equilibrium? This survey paper aims, precisely, at giving some preliminary answers to a complex – therefore, ongoing – debate at scientific as well as banking and political levels.
Findings
The coexistence of State's money (i.e. “legal tender”) and cryptocurrencies can have a disciplining effect on central banks. Nevertheless, there are still high risks connected to the introduction of central bank digital currency, which should be by far not considered to be a perfect substitute of current cash. At the same time, cryptocurrencies issued by central banks might be exposed to the drawbacks of cryptocurrencies without benefiting from correspondingly strong advantages. A well-governed two-tier system to be achieved through innovation in payment infrastructures might be, in turn, more preferable. Regulated competition by new players combined with “traditional” deposits and central bank elements remains essential, although central banks should embrace the technologies underlying cryptocurrencies, because risk payment service providers could move to other currency areas considered to be more appealing for buyers and sellers.
Research limitations/implications
We do not see specific limitations besides the fact that the following is for sure a broad field of scientific research to be covered, which is at the same time at the origin of ongoing developments and findings. Originality and implications of the paper are, instead, not only represented by its conclusions (which highlight the role of traditional payment instruments and stress why the concept of “money” still has to have specific features) but also by its approach of recent literature's review combined with equally strong logical-analytical insights.
Practical implications
In the light of these considerations, even the role of traditional payment systems like paper money is by far not outdated or cannot be – at this point, at least – replaced by central bank digital currencies (whose features based on dematerialization despite being issued and guaranteed by a public authority are very different).
Social implications
No matter which form it might assume is what differentiates economic from barter transactions. This conclusion is by far not tautological or self-evident since the notion of money has historically been a great object of scientific discussion. In the light of increasingly modern payment instruments, there is no question that money and the effectiveness of related monetary policies have to be also explored from a social perspective according to different monetary scenarios, ranging from central bank digital currencies to private currencies and cash restrictions/abolition.
Originality/value
The originality/value of the following article is represented by the fact that it (1) refers to some of the most relevant and recent contributions to this research field, (2) moves from payment systems in general to their newest trends like cryptocurrencies, cash restrictions (or, even, abolition proposals) and monetary policy while (3) combining all elements to reach a common picture. The paper aims at being a comprehensive contribution dealing with "money" in its broadest but also newest sense.
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Rangan Gupta and Emmanuel Ziramba
This paper aims at developing a theoretical model of a world economy characterized by tax evasion. It seeks to analyze whether financial repression can be explained by tax evasion.
Abstract
Purpose
This paper aims at developing a theoretical model of a world economy characterized by tax evasion. It seeks to analyze whether financial repression can be explained by tax evasion.
Design/methodology/approach
The analysis is performed in overlapping generations dynamic general equilibrium endogenous monetary growth models.
Findings
The paper shows that higher degree of tax evasion within a country, resulting from a higher level of corruption and a lower penalty rate, yields higher degrees of financial repression.
Practical implications
Financial repression can be explained by tax evasion but under specific conditions.
Originality/value
This is the first attempt to analyze financial repression and tax evasion in an endogenous growth model.
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This chapter assesses the feasibility of monetary union in other parts of the world, other than Europe. The major issues examined in relation to forming a monetary union are…
Abstract
This chapter assesses the feasibility of monetary union in other parts of the world, other than Europe. The major issues examined in relation to forming a monetary union are national sovereignty, seigniorage revenues, uneven economic growth and stability of currency unions. Dollarization is considered as an alternative to and a catalyst for currency union in Latin America. This chapter concludes that monetary union is unlikely to come about outside Europe because of a lack of an institutional framework and commonality. In addition, economic shocks are unlikely to be dissipated symmetrically, which is a major requirement in currency union formation.
Propensity to dollarize in Latin America in the demand-side of some economies of the region has a strong political risk component which, in the past, was mainly carried out by…
Abstract
Propensity to dollarize in Latin America in the demand-side of some economies of the region has a strong political risk component which, in the past, was mainly carried out by inflationary pressures. Coping with risk meant holding FCDs. A recursive multilevel model is developed and empirically tested with Colombia’s data to stress a country-specific tendency to dollarize due to political risk. The chapter’s conclusions suggest that consideration of issues, policies and implications inherent to the decision to dollarize cannot ignore that, the solution to any government-enforced dilemma in the supply-side of these economies, is also politically motivated. Results of a survey are also provided.
Abstract
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