A REVIEW OF MONETARY DETERMINANTS OF CRYPTOCURRENCY ADOPTION IN ISLAMIC FINANCIAL SYSTEM

Abstract

This paper discusses the money and financial system from both the conventional and Islamic points of view. To further elucidate this topic, some aspects of the conventional financial system are discussed on the applicability from an Islamic perspective. Firstly, the advancements of technology that had led to the invention of cryptocurrency and how the Islamic financial system can evaluate the determinants of the adoption of such cryptocurrencies were reviewed. Secondly, the use of digital wallet and how it is encouraged by the government to increase transparency in the financial system and finally, the applicability of a dual-currency model, which covers the idea of revitalizing the dinar and the dirham as well as the implementation of a dual-currency regime in a nation and how it benefits the economy and prevents the failures of the financial system are discussed along the way. The paper reviews scholarly work conducted by both contemporary conventional and Islamic economic scholars. In addition to that, this paper incorporates the views from the classical Islamic scholars such as al-Ghazali, as well as reviewing the money, banking, and financial systems that were conducted during the early Islamic reign, which would be deemed helpful in formulating an Islamic monetary system that could be pre-eminent in today’s world.