Evaluation of credit generated by the deposit money system from the perspective of Islamic economics

This study aims to evaluate the credit produced by the fiduciary money system, which forms the foundation of modern economies, from the perspective of Islamic economics. The research focuses on whether the credit creation mechanism of the fiduciary money system aligns with the fundamental principles of Islamic economics, particularly the prohibition of interest (riba).The historical development, functions, and types of fiduciary money are examined, and the conventional credit system is compared with Islamic economics. Additionally, alternative credit models compatible with Islamic economics, such as Murabaha, Mudarebe , Musharaka, and Sukuk, are analyzed to determine whether they can offer alternative or complementary approaches to the fiduciary money system. The study investigates the economic and social impacts of fiduciary money production, particularly its effects on inflation, income distribution, and financial stability, from the perspective of Islamic economics. The results indicate that certain aspects of the fiduciary money system conflict with the principles of Islamic economics, highlighting the importance of developing alternative models based on interest-free finance principles. In conclusion, this study provides a significant contribution to the evaluation of the fiduciary money system from the perspective of Islamic economics and emphasizes the importance of developing financial systems that align with the fundamental principles of Islamic economics to ensure economic and social justice.