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Central Bank Digital Currencies (CBDCs): An Evaluation from Islamic Law and Islamic Economics Perspectives

Year 2024, Volume: 10 Issue: 2, 106 - 126, 30.09.2024
https://doi.org/10.54427/ijisef.1455932

Abstract

Central Bank Digital Currencies (CBDCs) garnered significant attention from economists, policymakers, and financial institutions worldwide. CBDCs, as digital currencies issued and regulated by central banks, are currently under exploration by 134 countries, with 11 having fully launched them. The development of CBDCs has been accelerated by technological advancements and the global Covid-19 pandemic. Within the Organization of Islamic Countries (OIC), CBDC exploration varies in speed and interest among stakeholders. While most CBDC initiatives are still in the pilot phase, there is no universally agreed upon standardized format. This paper evaluates Central Bank Digital Currencies (CBDCs) from both Islamic law and economics perspectives. It examines the status of CBDCs as money under Islamic law and explores key aspects from an Islamic economic standpoint, including monetary sovereignty, money market regulation, and fiscal policies. The study employs a qualitative analysis approach, combining a literature review with descriptive methods. The study reveals that CBDCs are generally compatible with Islamic principles of money and offer potential benefits for Islamic economies, including enhanced financial inclusion, improved monetary policy control, and opportunities for new Islamic financial institutions. Although CBDCs hold great potential, their successful implementation requires careful consideration of regulatory and technological challenges while adhering to Islamic principles. Integrating CBDCs into an Islamic economic framework offers an opportunity for sound economic development that aligns with Islamic values. CBDC designs aligning with full-reserve banking principles and monetary sovereignty, while mitigating risks and maximizing benefits is proposed. Further research focusing on CBDC pilot projects and Islamic economic model designs is recommended to gain a deeper understanding of their implications.

References

  • al-Abdelmuneam, Abdallah, and Talib Warrad. 2022. “Legal Digital Currencies: An Islamic Economic Estimate.” Jerash Journal for Research and Studies 23(2):4813–35.
  • Ali Haydar Efendi. 1314. Dürerü’l-Hükkâm şerhu Mecelleti’l-Ahkâm: Kitabü’l-Büyû. İstanbul: Âlem Matbaası.
  • AMF. 2022. Central Bank Digital Currencies : An Analytical Framework for Arab Central Banks.
  • Auer, Raphael, Giulio Cornelli, and Jon Frost. 2020. Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies. 880.
  • Ayub, Muhammad, and M. Fahim Khan. 2021. “Evolving Monetary Economics In Islamic Perspective.” Journal of Islamic Monetary Economics and Finance 7(2):317–40. https://doi.org/10.21098/jimf.v7i2.1372
  • BCG. 2022. Central Bank Digital Currencies: A Global Capital Markets Perspective.
  • Bech, Morten, and Rodney Garratt. 2017. “Central Bank Cryptocurrencies.” BIS Quarterly Review (September):55–70.
  • Belabes, Abderrazak. 2022. “Challenges for Saudi Central Bank in the Face OfShariah-Based Digitalization of Money.” Islamic Finance News, January 25.
  • BIS. 2018. Central Bank Digital Currencies.
  • Boynukalın, Ertuğrul. 2003. “Makāsidü’ş-Şerîa.” TDV Encyclopedia of Islam 27:423–27.
  • Dönmez, İbrahim Kafi. 2003. “Maslahat.” , TDV Encyclopedia of Islam 28:79–94.
  • Dyson, Ben, and Graham Hodgson. 2016. Digital Cash: Why Central Banks Should Start Issuing Electronic Money.
  • Federal Reserve Board. 2022. Money and Payments : The U . S . Dollar in the Age of Digital Transformation.
  • Firdiansyah, Fitra Azkiya, and Andriani Samsuri. 2021. “The Urgency Of Central Bank Digital Currency (CBDC) Implementation: Maqāshīd Syarī’ah Perspective.” An-Nisbah: Jurnal Ekonomi Syariah 8(2):424–53.
  • Hamza, Hichem, and Khoutem Ben Jedidia. 2020. “Central Bank Digital Currency and Financial Stability in a Dual Banking System:” Pp. 233–52 in Advances in Finance, Accounting, and Economics, edited by N. Naifar. IGI Global.
  • İbn Abidin, Muhammed. n.d. “Tenbîhu’r-rukûd alâ mesâ’ili’n-nukûd.” Pp. 58–67 in Mecmuatu resaili İbn Abidin. Vol. 2. y.y.: Dâru İhyai’t-Türasi’l-Arabi.
  • Irfan, Harris. 2022. Retrieved July 24, 2023 (https://threadreaderapp.com/thread/1580248642933657600.html ).
  • IUMS. 2022. “Ijtihad and Fatwa Committee Decision No. (1) on Bitcoin and Digital Currency Transactions.”
  • Kahn, Charles M., and William Roberds. 2009. “Why Pay? An Introduction to Payments Economics.” Journal of Financial Intermediation 18(1):1–23. https://doi.org/10.1016/j.jfi.2008.09.001
  • Miras, Kamil. 1978. Sahih-i Buhari Muhtasarı Tecrid-i Sarih Tercemesi ve Şerhi. Vol. 5. Ankara: Diyanet İşleri Başkanlığı.
  • Mohamed, Hazik. 2020a. “Central Bank Digital Currency (CBDC) Formats and Their Implications.” Pp. 165–76 in Beyond Fintech. World Scientific.
  • Mohamed, Hazik. 2020b. “Implementing a Central Bank Issued Digital Currency with Economic Implications Considerations.” International Journal of Islamic Economics and Finance (IJIEF) 3(1):51–74. https://doi.org/10.18196/ijief.2121
  • Prayudya, Daffa Rizqi, and Salahuddin Al-Ayubi. 2023. “Islamic Central Bank Digital Currency (CBDC) Design.” Al-Infaq: Jurnal Ekonomi Islam 14(1):142–66.
  • Soderberg, Gabriel. 2022. Behind the Scenes of Central Bank Digital Currency. NOTE/2022/004. Washington, DC.
  • Shamshiyev, Ozat. 2023. “Islamic Worldview on Money and a Study of Digital Currencies from Islamic Law Perspective.” Eurasian Journal of Religious Studies 36(4):88-96. https://doi.org/10.26577//EJRS.2023.v36.i4.r10
  • Tekdogan, Omer Faruk, and Mehmet Sarac. 2020. “The Problems with Fractional Reserve Banking and Proposing a Shariah-Compliant Full Reserve Banking Model.” Pp. 133–53 in Islamic Monetary Economics: Finance and Banking in Contemporary Muslim Economies, edited by T. Eğri and Z. H. Orhan. Abingdon, Oxon; New York, NY: Routledge, 2021.

Merkez Bankası Dijital Para Birimleri (MBDP): İslam Hukuku ve İslam Ekonomisi Perspektifinden Bir Değerlendirme

Year 2024, Volume: 10 Issue: 2, 106 - 126, 30.09.2024
https://doi.org/10.54427/ijisef.1455932

Abstract

Merkez Bankası Dijital Para Birimleri (CBDC'ler) dünya çapında ekonomistlerin, politika yapıcıların ve finans kuruluşlarının büyük ilgisini çekti. Merkez bankaları tarafından çıkarılan ve düzenlenen dijital para birimleri olarak CBDC'ler şu anda 134 ülke tarafından araştırılmaktadır ve 11'i bunları tamamen başlatmıştır. CBDC'lerin gelişimi teknolojik ilerlemeler ve küresel Covid-19 salgını ile hızlanmıştır. İslam Ülkeleri Teşkilatı (İİT) içinde, CBDC araştırmaları paydaşlar arasında hız ve ilgi açısından farklılık göstermektedir. CBDC girişimlerinin çoğu henüz pilot aşamasındayken, üzerinde evrensel olarak mutabık kalınmış standart bir format bulunmamaktadır. Bu makale, Merkez Bankası Dijital Para Birimlerini (CBDC'ler) hem İslam hukuku hem de ekonomi perspektifinden değerlendirmektedir. CBDC'lerin İslam hukuku kapsamında para olarak statüsünü incelemekte ve parasal egemenlik, para piyasası düzenlemesi ve mali politikalar dahil olmak üzere İslam ekonomisi açısından kilit yönleri araştırmaktadır. Çalışma, literatür taraması ile tanımlayıcı yöntemleri birleştiren nitel bir analiz yaklaşımı kullanmaktadır. Çalışma, CBDC'lerin genel olarak İslami para ilkeleriyle uyumlu olduğunu ve İslami ekonomiler için gelişmiş finansal katılım, gelişmiş para politikası kontrolü ve yeni İslami finans kurumları için fırsatlar dahil olmak üzere potansiyel faydalar sunduğunu ortaya koymaktadır. CBDC'ler büyük bir potansiyele sahip olmakla birlikte, başarılı bir şekilde uygulanmaları, İslami ilkelere bağlı kalırken düzenleyici ve teknolojik zorlukların dikkatle değerlendirilmesini gerektirmektedir. CBDC'lerin İslami bir ekonomik çerçeveye entegre edilmesi, İslami değerlerle uyumlu sağlam bir ekonomik kalkınma için bir fırsat sunmaktadır. Tam rezervli bankacılık ilkeleri ve parasal egemenlik ile uyumlu CBDC tasarımları önerilirken, risklerin azaltılması ve faydaların azami düzeye çıkarılması hedeflenmektedir. CBDC pilot projelerine ve İslami ekonomik model tasarımlarına odaklanan daha fazla araştırma, bunların etkilerinin daha derinlemesine anlaşılması için tavsiye edilmektedir.

References

  • al-Abdelmuneam, Abdallah, and Talib Warrad. 2022. “Legal Digital Currencies: An Islamic Economic Estimate.” Jerash Journal for Research and Studies 23(2):4813–35.
  • Ali Haydar Efendi. 1314. Dürerü’l-Hükkâm şerhu Mecelleti’l-Ahkâm: Kitabü’l-Büyû. İstanbul: Âlem Matbaası.
  • AMF. 2022. Central Bank Digital Currencies : An Analytical Framework for Arab Central Banks.
  • Auer, Raphael, Giulio Cornelli, and Jon Frost. 2020. Rise of the Central Bank Digital Currencies: Drivers, Approaches and Technologies. 880.
  • Ayub, Muhammad, and M. Fahim Khan. 2021. “Evolving Monetary Economics In Islamic Perspective.” Journal of Islamic Monetary Economics and Finance 7(2):317–40. https://doi.org/10.21098/jimf.v7i2.1372
  • BCG. 2022. Central Bank Digital Currencies: A Global Capital Markets Perspective.
  • Bech, Morten, and Rodney Garratt. 2017. “Central Bank Cryptocurrencies.” BIS Quarterly Review (September):55–70.
  • Belabes, Abderrazak. 2022. “Challenges for Saudi Central Bank in the Face OfShariah-Based Digitalization of Money.” Islamic Finance News, January 25.
  • BIS. 2018. Central Bank Digital Currencies.
  • Boynukalın, Ertuğrul. 2003. “Makāsidü’ş-Şerîa.” TDV Encyclopedia of Islam 27:423–27.
  • Dönmez, İbrahim Kafi. 2003. “Maslahat.” , TDV Encyclopedia of Islam 28:79–94.
  • Dyson, Ben, and Graham Hodgson. 2016. Digital Cash: Why Central Banks Should Start Issuing Electronic Money.
  • Federal Reserve Board. 2022. Money and Payments : The U . S . Dollar in the Age of Digital Transformation.
  • Firdiansyah, Fitra Azkiya, and Andriani Samsuri. 2021. “The Urgency Of Central Bank Digital Currency (CBDC) Implementation: Maqāshīd Syarī’ah Perspective.” An-Nisbah: Jurnal Ekonomi Syariah 8(2):424–53.
  • Hamza, Hichem, and Khoutem Ben Jedidia. 2020. “Central Bank Digital Currency and Financial Stability in a Dual Banking System:” Pp. 233–52 in Advances in Finance, Accounting, and Economics, edited by N. Naifar. IGI Global.
  • İbn Abidin, Muhammed. n.d. “Tenbîhu’r-rukûd alâ mesâ’ili’n-nukûd.” Pp. 58–67 in Mecmuatu resaili İbn Abidin. Vol. 2. y.y.: Dâru İhyai’t-Türasi’l-Arabi.
  • Irfan, Harris. 2022. Retrieved July 24, 2023 (https://threadreaderapp.com/thread/1580248642933657600.html ).
  • IUMS. 2022. “Ijtihad and Fatwa Committee Decision No. (1) on Bitcoin and Digital Currency Transactions.”
  • Kahn, Charles M., and William Roberds. 2009. “Why Pay? An Introduction to Payments Economics.” Journal of Financial Intermediation 18(1):1–23. https://doi.org/10.1016/j.jfi.2008.09.001
  • Miras, Kamil. 1978. Sahih-i Buhari Muhtasarı Tecrid-i Sarih Tercemesi ve Şerhi. Vol. 5. Ankara: Diyanet İşleri Başkanlığı.
  • Mohamed, Hazik. 2020a. “Central Bank Digital Currency (CBDC) Formats and Their Implications.” Pp. 165–76 in Beyond Fintech. World Scientific.
  • Mohamed, Hazik. 2020b. “Implementing a Central Bank Issued Digital Currency with Economic Implications Considerations.” International Journal of Islamic Economics and Finance (IJIEF) 3(1):51–74. https://doi.org/10.18196/ijief.2121
  • Prayudya, Daffa Rizqi, and Salahuddin Al-Ayubi. 2023. “Islamic Central Bank Digital Currency (CBDC) Design.” Al-Infaq: Jurnal Ekonomi Islam 14(1):142–66.
  • Soderberg, Gabriel. 2022. Behind the Scenes of Central Bank Digital Currency. NOTE/2022/004. Washington, DC.
  • Shamshiyev, Ozat. 2023. “Islamic Worldview on Money and a Study of Digital Currencies from Islamic Law Perspective.” Eurasian Journal of Religious Studies 36(4):88-96. https://doi.org/10.26577//EJRS.2023.v36.i4.r10
  • Tekdogan, Omer Faruk, and Mehmet Sarac. 2020. “The Problems with Fractional Reserve Banking and Proposing a Shariah-Compliant Full Reserve Banking Model.” Pp. 133–53 in Islamic Monetary Economics: Finance and Banking in Contemporary Muslim Economies, edited by T. Eğri and Z. H. Orhan. Abingdon, Oxon; New York, NY: Routledge, 2021.
There are 26 citations in total.

Details

Primary Language English
Subjects Islamic Economy, Islamic Finance
Journal Section Research Article
Authors

Ömer Faruk Tekdoğan 0000-0002-4397-1718

Necmeddin Güney 0000-0002-3578-3231

Early Pub Date September 23, 2024
Publication Date September 30, 2024
Submission Date March 20, 2024
Acceptance Date June 27, 2024
Published in Issue Year 2024 Volume: 10 Issue: 2

Cite

APA Tekdoğan, Ö. F., & Güney, N. (2024). Central Bank Digital Currencies (CBDCs): An Evaluation from Islamic Law and Islamic Economics Perspectives. International Journal of Islamic Economics and Finance Studies, 10(2), 106-126. https://doi.org/10.54427/ijisef.1455932

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