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

Authors : Ömer Faruk Tekdoğan, Necmeddin Güney

Pages : 106-126

Doi:10.54427/ijisef.1455932

View : 256 | Download : 232

Publication Date : 2024-09-30

Article Type : Research Paper

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.
Keywords : İslam ekonomisi, İslam hukuku, İslami Finans, Merkez Bankası Dijital Para Birimi (CBDC), Parasal egemenlik.