Ma`rifat Eqtesadi

Commercial bank money creation, due to its direct relationship with inflation and its distributional consequences, constitutes one of the fundamental challenges of Iran's monetary system. Employing an analytical-descriptive method within an integrated juristic-economic framework, this study first examines the mechanisms of bank money creation; it then analyzes the trends of liquidity, inflation, and the liquidity-to-GDP ratio, drawing on data from the Central Bank of Iran and the Statistical Center of Iran (2001–2025). In the juristic section, using an ijtihadi-inferential method, the religious ruling on commercial bank money creation is derived based on six jurisprudential rules: unlawful appropriation of property (akl al-mal bil-batil), uncertainty (gharar), no-harm (la darar), deception (tadlis), destruction (itlaf), and prohibition of injustice (zulm). Findings indicate that commercial bank money creation conflicts with each of these rules, which suffices for its religious prohibition. In the legislative section, using a comparative-legislative analysis, legal gaps in monetary and banking laws were identified. Finally, using a deductive-prescriptive method, the proposed model of monetary sovereignty and three legal articles for controlling bank money creation were presented: monopoly of money creation by the Central Bank, conditional upon the needs of the real economy, non-harm to people's wealth, and distribution of benefits in line with public interests; limiting the money growth rate to the ceiling of economic growth; and obligating banks to maintain legal reserves, with deterrent penalties for violations.