KARACHI: Noted religious scholar Mufti Taqi Usmani has asked for reshaping the global economy to ride out of serious financial and commercial challenges posed by coronavirus.
In his address to the AAOIFI conference discussing Covid-19 related economic and financial issues, Mufti Taqi Usmani said it is a demonstration of Allah's infinite power that an invisible and lifeless creature has grappled the world with fear, humbling the so-called super powers. Their pride of excellence in science and technology has brought forward no medical strategy or medicine to overcome the contagion.
The pandemic has hit the world economy hardest with declining growth rates, increasing unemployment and bringing a sharp plunge in the stock and commodity markets are going to create a crisis of a magnitude where people will probably forget the 1929 recession and the financial crisis of 2008, he said. Usmani said though many of the present day economic problems are caused by the prolonged lockdowns imposed globally, but we should admit that critical problems are rooted in the unbridled capitalism, and it is high time to review it thoroughly.
Usmani said that 2008 financial crisis was the outcome of the artificial economy not based on real assets, but on speculative transactions, especially in the exchange of derivatives as futures options and swapping loans turning the economy into a bubble waiting only to burst. All such transactions that have no assets underlying them were possible only in a system where money is treated as a commodity and is traded on the basis of interest, he said. Terming interest as the mother of all financial evils, Mufti Taqi said Islam has prescribed an interest free system based on real assets in which all stake holders share the rewards and risks of the commercial activities, where money is only a medium of exchange, and not the object of speculative trade itself. This is the only way to avoid financial crises, Usmani said.
Islamic financial institutions were expected to bring change in this scenario and they tried to some extent to restrict their operation of assets based transactions, but their competition with conventional markets forced them to remain within certain boundaries set by the prevailing financial system without bringing a visible change in it. Drawing attention to seriously researching this issue, Mufti Taqi called to chalk out a road map for reconstituting the economy based on real assets where all stake holders share the rewards and risks of the commercial activities without speculative trade.
