Money, Its Origins, Nature and the Time Value of Money

Abstract

Appreciating the Islamic concepts of banking and finance is essential to place them within the context of the beliefs and philosophy underlying Islam. This chapter deals with a matter closely related to the subject of usury (which is strictly prohibited) in Islamic jurisprudence, and laydown another important foundation in relation to the study of the principles of Islamic accounting. It is the essence of the Shariah rules regarding all forms of exchange transactions of paper currency (fiat money) today. The key issue that this Chapter addresses is what money is, how it is viewed and what is the Islamic view of money? This chapter is divided into various sections whereas I discuss the concept of money, what money is and its functions, pre-metallic money, metallic money and coinage, paper money, digital currency and time value of money. As accounting is all about money and assets and liabilities, it is important to understand the theory of money in both its traditional and Islamic economics contexts.