Solutions to deal with Riba

We are living in an unfair and unjust world, political and social exploitation and injustices are realized easily even by a common person, but the economic abuse is rarely understood, the abuse is not propagated in a way that every one could understand it. Economy is two-third of the life; every thing else combined is the rest, just like the proportion of water in our bodies. The behavior of individuals to the collective behavior of nations depend upon its economic strength. The sovereignty of nations is dependent on its economy. It would be more appropriate to say that the modern day slavery is economic slavery.

When economy is controlling individuals to nations is such a way, no one can afford to sit back and let some one else to control it. It is only possible when one knows as what to do to control its own economy and maintain its sovereignty. The study and statistics shows that every economy in this world is going down somewhere slowly and elsewhere rapidly. General public of Powerful nations to very weak nations are facing the economic system dilemma equally. However, strong nations are well positioned in enforcing their demand charters unjustly to smaller and weak nations in order to get going.

The continuous decline of every economy is a result of the artificial behavior of the economic system that has the power to concentrate resources in few hands, the mechanics of Riba (Interest) has played a pivotal role in this concentration. It is very alarming to note that less than 400 individuals own more than fifty percent of the total world's wealth, the situation is worsening day by day and no one knows what would happen when the whole economic system would fail. The possibility of failure of the economic system does exists, many economist are predicting it as well. One can imagine the fact that the total money reserve of all OECD countries (the largest economic group of wealthiest nations) can not survive for half day session of currency market trading - how fragile the political power is, the public of all these countries are at the mercy of forces beyond the control of any government.

What should be done to create a just system? To eliminate Riba (Interest) from the economic system is the first and most important step that must be taken if we have to save our world form more wars and famines. It is strongly realized by the serious economists throughout the world that an alternate system free from Riba (Interest) should be designed as early as possible to switch over before it is too late. There could be any number of solutions, I would like to propose the following two solutions :

A Just System

There is no doubt that a just system could only be designed by keeping the Islamic economic code at the heart of the system. This would only be possible when there will be a political will in the leadership. Muslim scholars and bankers have spent much time in designing many banking procedures and instruments according to Shariah that can expedite the transformation easily, but the question remains for the central governing system controlling the economy, the system may incorporate and accommodate the following :
  • The money creation should be the responsibility of the state.
  • The banks must invest only in equity investment.
  • The discounting should be explored such that it should serve as the driving force for the banks and the capital.
  • Riba (Interest) must be declared as crime in the society.

The Alternate Accommodating Approach

There could be another approach like this :
  • Let the banks do Riba (Interest) based banking as they are doing now.
  • With a little responsibility on their part to notify immediately to the central bank the amount of Riba (Interest) they have designed in any of their transaction that is going to occur.
  • The government should then issue fresh money equal to the Riba (Interest) amount and pumps it into the economy in a debt free fashion.

This approach would at least nullify the artificial scarcity that would have been created due to Riba (interest) based banking instrument, however, this approach will not serve the just distribution of wealth. The government can use this technique to fund its development projects, and people can get much relief in the amount of tax they would be paying otherwise.

This is not the perfect approach; however, it is a better alternate system and it can also be used in transition from present conventional banking to a purely Islamic economic system.