Exploring novel Islamic monetary system

Abstract

Purpose The purpose of this paper is to explore an alternative Islamic monetary system in which money is created from supply chain grassroots based on work effort and is accessible to people as long as they offer goods and services demanded by others. Design/methodology/approach This study adopts the critical realism approach and highlights the challenges with the present monetary system. It also proposes to address these challenges through an alternative monetary system in which money creation starts from the grassroots of the supply chain. The proposed system extends the real-world complementary currency concept of barter to a holistic electronic trading platform, which includes chain barter alternatives, licensed warehouses and electronic warehouse receipts within the Islamic microfinance practice, thereby facilitating cross-border trade and international trade payments. An electronic currency, valued at the worth of goods produced in the supply chain, is introduced as the medium of exchange. Findings The problem with past monetary systems can be addressed through current information technology and supply chain management to enable a monetary system and money creation based on real economic transactions. Originality/value This study proposes an alternative monetary system, which is only possible by harnessing supply chain management with money creation. The proposed monetary system may be considered, should the present system fail or need to be improved.