Ma Salaam Br. Douglas. Another great resource is the Ascent of Money: The Financial History of the World. Here is an extremely revealing quote from page 24-25 in Chapter 1: Dreams of Avarice.

“The Roman system of coinage outlived the Roman Empire itself. Prices were still being quoted in terms of silver denarii in the time of Charlemagne, king of the Franks from 768 to 814. the difficulty was that by the time Charlemagen was crowned Imperator Augustus in 80, there was a chronic shortage of silver in Wester Europe. Demand for money was greater in the much more developed commercial centres of the Islamic Empire that dominated the souther Mediterranean and Near East, so that precious metals tended to drain away from backward Europe. So rare was the denarius in Charlemagne’s time that twenty-four of them sufficed to buy a Carolingian cow. In some parts of Europe, peppers and squirrel skins served as substitutes for currency; in others pecunia came to mean land than money. This was a problem that Europe sought to overcome in one of two ways. They could export labor and goods, exchanging slaves and timber for silver in Baghadad or for African gold in Cordoba and Cairo, Or they could plunder precious metal by making war on the Muslim world. The Cursades, like the conquests that followed, were as much about overcoming Europe’s monetary shortage as about converting heathens to Christianity.

The only practical answer I can give you is the pious answer: Ask Allah (swt) to forgive you if, by no fault of your own, you are paying, receiving or contributing to the proliferation of usury. Allah (swt) is the Best Knower, and knows if you have no access to ribaa-free banking in your country and there’s nothing you can do.

It may not be practical (or legal in your country) for you to open an account with an online bank such as University Islamic Financial. As well, Barclay’s Islamic Finance division and HSBC Amanah may not be available where you are. I am not affiliated with any of these institutions, and I only mention them for reference so that you may look into them and determine for yourself if their services can help you in any way.

But I think the most practical thing I can suggest is that you talk to your Imam, and/or the learned elders of your community, about how the Believers in your country can pool your resources. Ask how you can all join together in not only the mutual teaching of truth, patience and constancy, but also the mutual creation of a Shariah-compliant mutual fund that can be used to finance the businesses, homes and other big-ticket expenditures of the Believers in a halal way.

By the way, the business where you lend money without any guarantee of a return is known in the West as an IPO, or Initial Public Offering. It’s very similar to Musharakah. The “incentive” is shared ownership in the underlying business, with the possibility of unlimited gains.

Dear Brother Zahid,

I know that disrespect was not your intention and neither was demonization mine. I know that none of us who have had our income, savings or investments tied up in banks are intentionally contributing to the evils of ribaa. The fact is, in most cases we can’t help it, or do not have an alternative. I was not trying to tell people how terrible they were for having a bank account, but rather to remind them where their money is going when they do. Many of us do not have an alternative to traditional banks because we keep saying, “We don’t have an alternative.”

Let’s at least start talking about the alternative that Allah (swt) prescribed for us.

JazakAllahu khair, Brother Abdul Malik, you are precisely on point. My intention was to promote dialog on this monumental issue. It’s not just about avoiding the nearly unavoidable evil of ribaa, but enjoining the good that will undoubtedly come from the entire Ummah finally being in financial Shariah compliance, inshaAllah.

Thank you also for the specifics. I will check out all of your recommendations.

Br. Zahid and others, you mention some good points, but I think the intention of this post, and many similar posts are the following:

1. Highlight the dangers of Riba from an Islamic and financial perspective.
2. Get people to understand how they can move away from Riba
3. Throw some ideas against the wall that will lead to us to build our own Riba-free institutions and economy.

I don’t think any well intentioned Muslim is expecting any Muslim to overturn a 50 trillion dollar riba based global economy overnight, but like a jagged rock, over time it will be smoothed by drops of water. Each individuals effort will be another drop to smooth the rock. I spoke to my brother-in-law from Saudi Arabia and many economies are moving (albeit slowly) to Shariah compliant financial instruments, because the riba based system is too unstable. If the world government didn’t print money to “save’ the global economy, we’d all be on bread lines. Their Riba system failed them and they had to resort to the fiat approach of printing money.
I don’t believe Br. Kelly was being judgmental (i.e trying to say who is doing haram and who isn’t in regards to riba), but was just trying to make it clear what is riba, and what isn’t riba, while showing how deep the well of riba is and it’s inter-connectivity to our day-to-day lives.

Your float between your checking account and your employer example is perfect example, but there is also this hadith.

“A time is coming to mankind when only the receiver of usury will remain and if he does not receive it, some of its dust will reach him.”  (Ahmad, Abu Dawud, Nasai, Ibn Majah).

So lets use myself as an example. Even if 100% of my money is riba-free, I pay the MTA (NYC) to travel back and forth to work. The MTA municipality issues bonds which are tied to interest rate (riba), and that principal plus interest gets paid to the bond holders. Lets take it a step further. Lets say I choose to walk to work instead of taking the train, the road itself was tied to a municipal bond somewhere in the chain, so just merely walking on the newly paved road that was partially financed by bond holders with interest, am I intentionally doing something haram? Will Allah make me accountable for this, (only Allah knows), but in my humble opinion, probably not. But if some other option was there that was riba-free, and I didn’t take advantage of it, maybe so. (allahualem)

Although crude and exaggerated examples, the bottom line is Allah wants are intentions to be true and whether we are in a situation where we can participate in a Riba free transaction. It depends on your situation. Not every person has the right riba-free banks or resources or in some instances knowledge to know how to distinguish from Riba and Riba-free transactions. It all goes back to the 1st condition of the first pillar of Islam. Knowledge with the right intention. Pray that Allah provides an alternative and keep it moving. I don’t think anyone should beat themselves up about this, but at the same time we need to do the due diligence about what Riba is and how to get out of it. (if we can). Simply..don’t procrastinate when it comes to your Deen. Do what you can but don’t make yourself crazy with a situation that you have absolutely no control over.

We do the best we can considering our circumstances. We were born into this Riba world and only recently are we seeing a mainstream renaissance in thinking on how to alleviate and build alternatives to this Riba system. It’s going to take the effort (with Allah guidance) of all of us to change this. This has to happen on a grass-roots level all the way to major banking systems. In my case, I’m going though a measured step-by-stop process. Started with my checking/saving accounts while moving my treasury bonds to cash. Then lowered my lifestyle so I can save more and beat inflation. On my way to selling my house (Inshallah) and moving it to an Islamic bank or renting. For anyone in the NYC area the name of the bank is Devon Bank. Next, are my 401K and Roth accounts. I want to move them to Shariah compliant mutual funds.

One other point. People should know is that the current Riba based western banking system is a fog of financial stability and inferior to a true Islamic banking system. They have printed money to save the system for hundreds of years. Trillions of dollars in bailouts to save the system while ignorantly sending the prices of basic commodities through the roof because of the tinkering of the money supply. How is this just and mathematically sound? For those interested, read A Free Nation Deep in Debt by James MacDonald, or This Time is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart, Kenneth Rogoff or End the Fed by Ron Paul.

Although the spiritual benefits (obedience to Allah) outweigh any material benefits, just in case people STILL think that Islamic Banking doesn’t work, here is the mathematical evidence. These are just a few but numerous articles out there on the long-term stability of Islamic finance. Allah would never give us a system that is inferior to another system. Allah knows best, we just need to follow through our our promise to Allah and our Deen. As they say, “The proof is in the pudding”.

Islamic Housing Finance: A ray of hope for low-income grouphttp://ifresource.com/2007/12/05/islamic-housing-finance-under-diminishing-musharakah-a-ray-of-hope-for-low-income-group/#comments

Islamic Banks fared better during financial crisis
http://arabnews.com/economy/islamicfinance/article142384.ece

Sincerely and respectfully,
Abdul Malik

I agree with most of what you say in your article but I have an issue when you make such statements. Your love-hate relationship with interest is something we all go through living in the U.S. and you have idealistic solutions the way every other Muslim talking about this issue has.

The problem is, you are demonizing a segment of society that has no other viable option because trust me, if there was another option… we would all embrace it.

Let me give you a personal example:

I have non-interest checking account but my employer doesn’t. According to the law, accrued salaries are set aside and it is illegal to touch that money because employee has already earned it but is waiting for the pay period to end. That money is earning interest… when I get my pay, it is tainted with interest.

Does that mean I am doing Haram? Does that mean that my hard work is down the drain because I can’t control whether my accrued salary earns interest or not?

You say “What if your business was financed with an interest-free loan you paid back according to your profits? No profits, no payments.”

Are you willing to start a business like that where all you do is lend and expect nothing in return? That’s a “Fi Sabillalah” approach which in theory is amazing but not practical. The key element is missing in your approach, it’s known as incentive.

If there was a Islamic credit union where I live, I would move my money in a heartbeat… but the problem is, there isn’t any. That’s the reason, I don’t think demonizing a segment of Muslim society that has no other resource is a way towards any kind of practical solution.

I apologize in advance if you think I was disrespectful with my comment, my intention was to just voice a concern with the hope that people would understand that the solution has to mirror the context.

All very well in theory, but how to do that in countries where muslims are a minority and no islamic banks exist?

Practical answer please

jazakallah khair

Awesome YouTube video, btw. JazakAllahu khair.