Review of Last Year’s Discussions – Subject Analysis: 1. Money – Aspect Five: Is Money a Real or Nominal Asset? – Aspect Six: Is Money Fungible or Non-Fungible?

Summary of the Previous Session

We discussed that last year’s topics primarily focused on the subject analysis of money. Several aspects were addressed, but since these aspects serve as a foundation for our main discussions, we must briefly review them. In the previous session, we covered four aspects: first, the ten stages of money’s evolution; second, the definition of money; third, the classifications of money; and fourth, the analysis of money’s nature, referencing three perspectives or theories. Although we did not arbitrate between these three theories, they include the purchasing power theory, the nominal value theory, and the theory of money as a document or warehouse receipt. In principle, we should examine the jurisprudential implications of the devaluation of money based on each of these theories, God willing.

Aspect Five: Is Money a Real or Nominal Asset?

The fifth aspect discussed last year was whether money is a real (ḥaqīqī) or nominal (i‘tibārī) asset. We stated that whether money is considered real or nominal has significant implications. Some scholars have argued that money is not a nominal asset but a real one. We refuted this, noting that, based on the definition of an asset—something that rational people desire and are willing to pay a price or compensation for—money does not necessarily have to be real. We explained that money can be real in one sense and nominal in another. In fact, all modern money is nominal; we no longer have real money today, as it is neither silver coins (dirham), gold coins (dinar), nor a commodity. In the past, real money was conceivable, but today, all money is nominal. There are differences between real and nominal money in certain rulings and aspects, such as those related to usury (ribā), currency exchange (ṣarf), zakat, and liability. For instance, transactional usury (ribā mu‘āmalī) applies to real money but, according to some perspectives, does not apply to nominal money. Similarly, in currency exchange transactions (bay‘ ṣarf), specific rules apply, such as the requirement for immediate possession when trading gold for silver, but this rule does not apply to nominal money. Additionally, real money is subject to zakat, whereas nominal money is not. There are also differences in liability and loss of money between the two.

Aspect Six: Is Money Fungible or Non-Fungible?

The sixth aspect concerns whether money is fungible (mithlī) or non-fungible (qīmī). This is a critical and foundational discussion regarding liability. We noted that there are several perspectives on this issue, and we referenced five viewpoints. It is important to clarify which type of money we are discussing when addressing whether it is fungible or non-fungible. Some types of money are undeniably fungible and are not subject to dispute. For example, commodity money, which was prevalent in the earliest stage of money’s development, is unanimously considered fungible. People exchanged goods like wheat, shells, salt, or hides, which were clearly fungible and thus outside the scope of dispute. Metallic money, such as gold and silver, which entered financial transactions after commodity money, is also undeniably fungible. Later, paper money backed by gold and silver emerged, and it is generally agreed that such money is fungible as well, especially since paper money today lacks gold or silver backing. Until a few decades ago, all paper money was backed by gold or silver, and no unbacked paper money existed. Thus, these three types of money—commodity money, metallic money, and backed paper money—are agreed to be fungible. The dispute arises with nominal money, whether in the form of unbacked paper currency or electronic money. The question is whether such money is fungible or non-fungible. There are differing viewpoints, and these perspectives may vary in their focus. To clarify, we first outlined the scope of the dispute to ensure it is clear which type of money we are discussing. When examining opinions, we noted that these opinions are expressed with different emphases:

1. The majority of jurists in the past century believe paper money is fungible, as previously mentioned.
2. The second viewpoint holds that paper money and currency are non-fungible.
3. The third viewpoint, advocated by Martyr Sadr, posits that paper money is fungible, but its fungibility is not merely based on the paper or the numbers printed on it. Instead, it is defined by its purchasing power, which is the essential characteristic of money’s nature. This view differs from the previous two, asserting that fungibility lies not in the paper’s form or color but in a defining attribute—purchasing power—that constitutes the essence of money. We will explore this further, God willing.
4. The fourth viewpoint distinguishes between significant and minor value disparities. If a currency’s value changes significantly between the time it was received and the time of repayment, it is considered non-fungible. However, if the value difference is negligible, it is considered fungible. Thus, currency may be fungible in some cases and non-fungible in others.
5. The fifth viewpoint argues that paper money is neither fungible nor non-fungible but constitutes a third category that does not fit within the fungible/non-fungible dichotomy. This is because the division of assets into fungible and non-fungible applies to real assets, whereas nominal money falls outside this categorization, rendering the concepts of fungibility and non-fungibility inapplicable. These are the five viewpoints we referenced. To reach a conclusion on whether money is fungible or non-fungible, we discussed several preliminary points, which extended the discussion. These included the definitions of fungible and non-fungible, the criteria for determining whether an asset is fungible or non-fungible, Shaykh Ansari’s statements, the common definition, Shaykh Ansari’s interpretation of the common definition, and the critiques he raised against it. We also cited the opinions of fourteen prominent jurists on fungibility and non-fungibility, grouping them into four categories based on their similarities:

• One group, the majority, defines fungible assets as those equal in components and value.
• Another group, like Shaykh Ansari, argues that fungible and non-fungible cannot be clearly defined, as they are customary matters.
• A third group, like Naini, lists four conditions for fungibility.
• The fourth group, including Imam Khomeini and to some extent Sayyid, believes that fungible assets are those whose instances share characteristics that evoke equal rational desire and consistent pricing. Having reviewed these viewpoints, definitions, and criteria, the core question remains: Is money fungible or non-fungible? We noted differences between old and new forms of money, highlighting their similarities and distinctions. The key issue is whether new money, due to its shared characteristics with old money, can be considered fungible, or whether its differences necessitate classifying it as non-fungible. Modern money, including cryptocurrencies, electronic money, and unbacked paper currency, is entirely nominal. Thus, when discussing fungibility or non-fungibility, we are addressing modern, nominal money, not traditional money like dirham, dinar, gold, or silver. Some argue that since gold and silver were fungible and modern money should follow suit, efforts are underway to revive gold-based money, as seen in recent initiatives promoting gold-backed paper currency. However, our focus is on examining whether modern, nominal money is fungible or non-fungible.

Question:

Professor: Like many other issues, this topic is subject to disagreement. Some, like Martyr Sadr, argue that currency, including all nominal money, is fungible and fits the definition of fungibility. However, they emphasize that fungibility must account for purchasing power, which is the defining characteristic of money’s nature. According to the three main theories of money’s nature—nominal value, purchasing power, and warehouse receipt—Sadr adheres to the purchasing power theory. Thus, when defining fungibility, he includes purchasing power as the essential attribute. If one accepts this premise, the issue is resolved by classifying money as fungible. For example, if someone borrowed money ten years ago, its purchasing power then might have allowed them to buy a car, but today, that same amount may only buy a car’s mirror. Such comparisons are common online, highlighting how inflation and reduced purchasing power affect value. In matters like loans or dowries, the purchasing power at the time of repayment should be considered. Without passing judgment, we note that inflation, defined as a general rise in prices, is measured scientifically using a basket of goods. This raises the question of which price increase to prioritize when values fluctuate dramatically. Last year, due to time constraints, we did not conclude whether money is fungible or non-fungible, noting that these five viewpoints require further examination. God willing, once this analysis is complete, the sixth aspect of money will be finalized, concluding the subject analysis of money. However, one or two related topics remain, including inflation itself. We must explore the relationship between inflation, rising prices, and the devaluation of money, as these concepts should not be conflated. We briefly touched on this last year and will pursue it further, God willing.

Emphasis of Imam Khomeini and the Supreme Leader on Unity, Rooted in the Quran and the Tradition of the Prophet (PBUH) and His Household (AS)

As we are in the blessed days of the birth anniversary of the Noble Prophet (PBUH) and Imam Sadiq (AS), and given that this week is designated as Unity Week, I will share a relevant narration from these two unparalleled figures, starting with the Prophet (PBUH) and followed by Imam Sadiq (AS). The Prophet (PBUH), in a concise narration recorded in Nahj al-Fasaha, states: “Unity is a mercy, and division is a torment.” Few statements capture the value of unity and the danger of division as eloquently. Unity and togetherness are a mercy, while separation, discord, and conflict are a torment. This is explicitly stated in the Quran. Where unity exists and hearts are close, divine mercy flows toward people. The spiritual blessings of unity far surpass material ones. A society abundant in material wealth but plagued by conflict and discord is akin to hell, devoid of peace. Conflict pollutes souls with unrest, anxiety, and strife. Conversely, where unity, equality, and brotherhood prevail, even in a barren desert, it is paradise. A wealthy family with no material lacks but constant internal strife cannot enjoy its wealth. In contrast, a family with minimal resources but strong bonds, sincerity, and affection lives as if in paradise. Division and discord are truly a torment, with no affliction worse than conflict and strife. Consider the impact of mercy and torment in a small family; in larger contexts—a community, organization, institution, nation, or the Muslim Ummah—the effects are magnified. The broader the community, the more severe the torment of division and the greater the power of unity. No force can withstand a united community. If Muslims were united today, even with minimal military and defensive resources, no global power could stand against them. The emphasis of our great jurists, Imam Khomeini, and the Supreme Leader on unity is a core Islamic principle rooted in the Quran and the tradition of the Prophet (PBUH) and his Household (AS). As time has run out, I will conclude with a narration from Imam Sadiq (AS): “A charity beloved by God is reconciling people when they are divided and bringing them closer when they are estranged.” The term used is “reconciling people” (bayn al-nās), not just Muslims or believers, indicating reconciliation among all people during times of division and discord. When people drift apart, bringing them closer and resolving conflicts is a charity beloved by God. Charity is not limited to giving money or food; it carries the same spiritual benefits as other forms of charity, such as longevity and protection from calamities, whether financial or otherwise. Those without wealth to give can still perform this charity by reconciling people and fostering unity. Creating discord between individuals, Muslims, or compatriots is undoubtedly displeasing to God. To be beloved by God, we should strive to foster friendship, sincerity, and empathy among people. Why do some take pleasure in division or instigate conflict? This mindset, whether in personal or social life, is a malaise we must address. May God grant us the ability to be kind and compassionate toward one another, God willing.