The Dilemma of Instability in the Monetary and Financial Systems in Light of the Economic Doctrine in Islam

Demonstrating the resilience of the Islamic economy against inflation, financial crises, and business cycles is far easier than proving the ability of Islamic banks to withstand these challenges under the fractional reserve system. This constitutes the central hypothesis of this paper. To clarify it, the study addresses fundamental issues related to the creation of credit money, including speculation, margin-based currency trading (Forex), and alternative interpretations of the recent financial crisis, in addition to analyzing the core elements of the original debate.
Keywords: Credit Money, Inflation, Forex, Islamic Banks, Financial Crisis

JEL Classification: D1, P41, Z12

KAUJIE Classification: I12, I16, A2