TOWARD A MAQASID AL-SHARIAH-BASED MONETARY SYSTEM: A CONCEPTUAL CRITIQUE OF FIAT MONEY
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Abstract
This study examines the structural weaknesses of the fiat money-based monetary system and evaluates its compatibility with the objectives of maqasid al-shariah. Employing a qualitative library research approach, the study applies thematic content analysis to classical and contemporary literature on monetary economics, Islamic economics, and maqasid al-shariah. The analysis focuses on four major themes: monetary expansion, financial instability, distributive inequality, and social welfare. These themes are subsequently evaluated using the maqasid al-shariah framework, particularly the dimensions of wealth protection (hifz al-mal) and human well-being (hifz al-nafs). The findings indicate that the fiat money system structurally encourages debt-based monetary expansion, excessive financialization, and unequal distribution of seigniorage benefits. These conditions contribute to inflationary pressures, recurrent financial crises, and widening wealth inequality, thereby weakening the linkage between the monetary and real sectors. From a maqasid al-shariah perspective, such outcomes have the potential to undermine wealth preservation, distributive justice, and broader social welfare. This study argues that a monetary system more consistent with maqasid al-shariah requires institutional reconstruction rather than merely changing the form of money. Accordingly, it proposes a conceptual framework based on four interrelated pillars: asset-backed monetary arrangements, stronger integration between monetary and real sectors, controlled credit expansion through risk-sharing finance, and maqasid-oriented monetary governance. The main contribution of this study lies in integrating the critique of fiat money with a comprehensive maqasid al-shariah evaluation framework and providing a conceptual roadmap for developing a more stable, equitable, and welfare-oriented monetary system.
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