Abstract
Contemporary scholars have adopted the resolution of the Islamic Law Research Council which was arrived at during their 1965 convention. The Council's decision was to adopt the opinion of Ibn Taymiyah that the affective cause for prohibiting interest in gold and silver is that it 'serves as an absolute monetary entity in the market'. On that basis, the resolution declared, the prohibition of interest applies to paper currency. The question that needs to be asked is to what extent do contemporary Islamic economics conform to these necessary consequences of adopting Ibn Taymiyah's opinion? This paper will explore this matter and answer the central questions: is the depreciation of purchasing power something intrinsic to the nature of paper currency or something external to it? And if it is part of its nature, what are the implications?
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