Islamic Banking

Islamic Banking does not abolish interest — it understands it correctly. What the prohibition of Riba forbids is money without consideration: a fixed, effortless increase on a loan that accrues to the lender whether the financed project fails or flourishes. In the MoMaT money theory, however, interest is not such an effortless gain but an insurance premium — the price for bearing and distributing risk across time and space, and thus a genuine service in return. Seen this way the prohibition is not circumvented; the supposed conflict simply never arises, because what is forbidden (gain without counter-performance) is not what interest-as-risk-premium is (payment for the service of carrying risk). The model follows the historical precedent of the Mudaraba (a profit-and-loss-sharing partnership between a capital provider and an entrepreneur) and adds a risk pool, so the premium is variable and success-dependent, obligations stay bounded, and excessive uncertainty (Gharar) is avoided. This is finance within a four-thousand-year tradition: continuity, not rupture.

For the full argument — the seven pillars, the ethics of risk versus interest, and the historical lineage from Babylon to the medieval Mediterranean — see the vision page:

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