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Race for Future of Money

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Crypto versus Central Banks

Central Banks around the world have fear that crypto currency will render their domestics currencies obsolete. Their concern is if more and more citizens invest, hold funds in digital wallets, or trade in crypto-currencies, the banks will not be able to control its money supply.

These Central banks concerns that local currencies become obsolete, or they lose control over it, have compelled central banks to launch their own digital currencies called Central Bank Digital Currencies (CBDC). 

83 Central Banks Entered into Race

Mr Benoît Sureau ,a Financial Services Risk and Blockchain of PwC, has stated that “More than 60 (now 83) central banks have already entered the central bank digital currency race. CBDCs will be a game-changer, providing access to alternative payment solutions for citizens and corporates, as well as reinventing financial market settlement and interbank monetary transactions.”

Governor of Bank of Ghana Assertion of Competition

Ghana is among the 83 countries who have entered the digital currency race, and Dr. Ernest K. Y. Addision, Governor of Bank of Ghana, observed that “CBDC presents a great opportunity to build a robust, inclusive, competitive and sustainable financial sector, led by the Central Bank. From all indications, the concept has a significant role to play in the future of financial service delivery globally. This project is a significant step towards positioning Ghana to take full advantage of this emerging concept.”

There are numerous benefits of CBDC, and reasons to develop it, however one utmost reason is competition. It is a means to compete for a “sustainable financial sector”, being derived by “emerging concept” which is crypto, and led by bitcoin, hence a competition between bitcoin and central banks, in a short-put. This is seen as a neutralization effort of crypto currencies dominancy at the digital arena. A competition to control the future of an “emerging concept” of money. What then is Islamic finance ruling on crypto currency in general? Is Crypto currency considered a Currency in the perspective Islamic business law?

Sharia Ruling on Crypto currency

Dr Mohammed Burhan Arbouni, Head of Sharia Compliance of Alsalam Bank of Bahrain, answering question whether cryptocurrency is permitted in Islamic financial dealings, explained that “there is no haram or halal quality on crypto currency.” According to him one will not know whether a physical currency, example the Ghana cedi is halal or haram. For that matter, the line of “argument for or against crypto currency is false.” The argument should then be “whether crypto currency is currency or not currency from sharia point of view and if it is not currency what is it?” 

Crypto is not a Currency – Dr Burhan

According to Dr Burhan, there are “number of criterion that are necessary from sharia point of view in order to categorise something as currency. Among them is that a currency should be something that even small boy or a person in a remote village can hold and use it to acquire necessary goods. It should be something that everybody in the world or a particular society can be used to buy and sell goods. It should not be something that only few people in the society can have access to. In this case, it is not a currency in the border meaning of currency. It should be a thing that store value, of course crypto currency is so as well as a property stores value. The fact that property or land store value does not mean it is a currency. Until bitcoin or otherwise available for everyone without the use of big computers and data to get them they still remain something that represent intellectual property similar to car plate numbers that are sold and bought. Similar to telephone chips with unique numbers that are sold and bought.”

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