Ma`rifat Eqtesadi

Despite numerous studies on bank credit money creation, considerable ambiguity remains concerning its status in Islamic banking discussions. This paper employs an analytical method to examine the Islamic economic perspective on bank credit money creation through fractional reserve banking and = creating credit money from nothing by creating credit in the account. According to the findings, money creation leads to problems such as multiple simultaneous claims of ownership over a single, definite property. Moreover, credit creation money from nothing resembles fictitious cheques. From a legal perspective, the study concludes that any form and amount of bank credit money creation—even under a fractional reserve banking system—is, from a jurisprudential standpoint, a case of akl al-māl bi'l-bāṭil (unjust enrichment), and thus religiously prohibited. This conclusion calls for policy and legislative measures to counteract money creation practices in the Iranian economy.