After reading this article, I gave the following comments:

Islamic banking

If they say your deposit is a “Deposit given for safe keeping” this is called in Islamic law a “wadee’ah”. This means they should not touch it. But if they do without permission, then they become 100% liable for its repayment as they are not supposed to touch it. But most importantly, if something grows from it, it belongs to the owner of the capital. That means taking the profits or some of it would amount to theft (islamically speaking) if occurred without explicit permission. If they use it with permission, then it’s mudhaarabah, ie venture capital investment and that means the depositor could lose their deposit and the bank wouldn’t be liable unless due to negligence. This needs to be made clear, which is why I’ve never agreed that any of these ‘Islamic banks’ are Islamic, as I’ve NEVER seen this risk communicated to depositors. I only see ‘guaranteed % gains’ and no ‘% gains of any profits OR LOSSES’.

What was interesting about this article is that it talks about

“All this does, is that instead of Bank A lending money to Bank B and asking for a slightly higher amount (i.e. an interest rate), Bank A will sell something (usually a metal, like copper) to Bank B at a slightly higher price than the current market price and Bank B will pay for this copper at a later date (depending on when the money is due).”

But such a transaction would be Ribaa, ironically. How? Well as I explained in my Ribaa video, metals are ‘fungible’ items and therefore from the ‘ribaweeyaat’ (items that Ribaa occurs on) and therefore need immediate settlement if exchanged for different ‘types’ like copper for gold, and need to be equal amounts as well as immediate settlement if the same time like gold for gold.

So muraabahah in the above mentioned form would still be Ribaa, but Ribaa al fadhl.

So when the author states:

“It’s not hard to see that this is practically the same thing as a loan with interest. “

I would go one step further and say that it is 100% Ribaa as described. The only way it wouldn’t be is if the item being sold is not fungible. But if it’s not fungible, then it wouldn’t be used as it would be a terrible medium of exchange (ie money). Imagine it was property in stead of copper, that means a surveyor would have to be employed with every transaction, evaluating the value of the home and its state, etc. ie the very reason it cannot be used as money. And if they ‘bundled’ a basket of non-fungible items and gave an overall value’ to the basket in order to ‘monetise’ it then there is definitely gharar involved, as the individual items in the basket 🧺 is not clear.

An overall great article. Maybe something could be formulated using fedimint, but that would still require some regulatory alignment I would assume. I can’t imagine it would be easy to operate anything like this idea without bending the knee to a central bank or regulatory body. But I’m sure it’s possible somehow. @CaitlinLong_ managed to start something with a similar idea of a full reserve banking system. So we’ll see how this space progresses.