2. Topics covered
1. The business of Banking and Money Creation
2. Jual-beli dan Perbankan Islam
3. Elemen2 jual-beli
4. Is real Islamic Banking possible?
2
3. “Cara atau proses bank mencipta uang
adalah sangat-sangat mudah sehingga
aqal kita menolaknya”
“The process by which banks create money is so simple
that the mind is repelled by it”
John Kenneth Galbriath
Economist
Money Quotes
3
4. “Setiap kali bank membuat satu pinjaman baru,
kredit bank yang baru diadakan,
-deposit baru-
uang yang baru diterbitkan.”
“Each time a bank makes a new loan, new bank credit is created
-new deposits-
brand new money.”
Graham F. Towers;
Governor Bank of Canada
1934-54
Money Quotes
4
6. The business of Banking
^
• The bank gives out
millions in loans
everyday; but
• There is not much cash
in the vault
Where
is the
money?
• Money is an
accounting entry
• Credit customer
• Debit HQ
• Money creation
• New loan = New Money
6
7. Scenario – New Country
BANK
CENTRAL
Employees
Contractor Retailer
Businesses
1a.
New
Money
2a.
2b.
4a. Purchases
4c. Safekeeping
& loan payment
4b. Tax
5a. Loans
5b. Loans
3c. Tax
3b. Tax
3a Purchases.
7
Seignorage
1.Bonds
Payments for
work &
salaries
8. Scenario – New Country
BANK
CENTRAL
Employees
Contractor Retailer
Businesses
1a.New
Money
4a. Purchases
4c. Safekeeping
& loan payment
4b. Tax
5a. Loans
5b. Loans
3c. Tax
3b. Tax
3a Purchases.
8
1.Bonds
2a.
2b.
Seignorage
Payments for
work &
salaries
9. The business of Banking • Is LENDING
• At an Interest
Loans
9%
Deposits
2%
Gross Profit
7%
• Money creation
^
9
12. Where is the MONEY???
ASSET LIABILITY
Money in the bank 65.132
Total Loans given out 58.619
Cash-in-hand 6.513
$65.132 $65.132
Loan interest @ 10% 5.862
Where will the borrowers get the
additional money to pay interest to
the bank? 12
Initial cash only $10.000
13. Where
is the
money?
1. How much actual cash is there in the
system?
2. Where did the bank get the money to
lend to the borrowers?
3. Where will the borrowers get the
money to pay their interest?
4. What happens when all the
customers wants to withdraw all
their monies at the same time?
Questions
13
14. Riba Bank Pinjaman 100.000
Kadar Bunga 10%
Nasaba Peminjam 110.000
Untung 10.000
Status Penghutang
14
16. Bank Pinjaman 100.000 Jualan
Kadar Bunga 10% Keuntungan
Nasaba Peminjam 110.000 Pembeli
Untung 10.000
Status Penghutang
….. padahal Allah telah menghalalkan jual-beli
(berniaga) dan mengharamkan riba….
S Baqarah 2/275
….. mereka berkata (berpendapat) jual beli itu
sama dengan riba,
16
18. Perbankan Islam
….. padahal Allah telah menghalalkan jual-beli
(berniaga) dan mengharamkan riba….
• S Baqarah 2/275
Conventional
BankingPerbankan
Islam
18
19. All authors
Islamic Banks are different from Conventional Banks
• Depositors are no longer lenders to the bank;
they are shareholders in any activity in which the
bank becomes involved;
• The customers are potential investors through
having a Profit/Loss share. They are no longer
borrowers;
• Through its engagement in PLS contracts, the
bank becomes the partner of investors and,
unlike its conventional counterpart, provides
equity-capital rather than debt-capital
19
20. All authors
Islamic Banks are different from Conventional Banks
• The profit and loss sharing arrangement
between the bank and the customer on both
sides of the balance sheet, which represents
unique risk characteristics;
20
21. All authors
Islamic Banks are different from Conventional Banks
• The nature of financial intermediation, including
the function of banking, is different in the case of
Islamic banks.
• For Islamic banks the mudarabah contract is the
cornerstone of the financial intermediation and
thus of banking.
• The basic concept is that both funds mobilization
and (in theory) funds utilization are on the same
profit sharing among the depositors, the bank
and the entrepreneur.
21
22. All authors
Islamic Banks are different from Conventional Banks
• Islamic banks face significantly different risks
as compared to an interest based
conventional system/bank because they
operate primarily on profit sharing basis …
22
23. All authors
Islamic Banks are different from Conventional Banks
• Compared to conventional banks, if you were
to obtain as Islamic loan for a project, instead
of being charged interest for the loan, you
could be paying fees or sharing a portion of
your profits for the project with the bank.
23
24. Cornerstone of a sale
Elemen2 jual-beli
• For majority of Fuqaha’
1. The seller/Penjual
2. The buyer/Pembeli
3. The language of the contract (offer and
acceptance)/aqad
4. Object/barang
5. Price/Harga
24
25. Soalan
• Apa tujuan kita ke bank?
• Apa tujuan kita ke bank Islam?
Conventional
BankingPerbankan
Islam
25
26. I need a
LOAN
TRADING ???
or
ILLUSION of Trading
for purpose of
DEBT creation?
Cost + Profit rate
Deferred payment
DEBTOR
Islamic Banks using
“MURABAHA TRADING” to create DEBT
Bai al-’Inah (2 party contract)
26
27. 1 asset multiple sales
X’s ??
• Not consumed, same item re-sold a thousand times
• Financial market larger than real/physical market
• Without rollover of underlying asset, there is NOT ENOUGH
commodity to back IB transaction
• Real trade ??
27
28. Tawarruq - 3 party sale
Bank Islam
Nasaba/Pengh
utang
Di-beli
Rp 50 jt
Di-jual
Rp 48 jt
Penjual/Pembeli
Rp 50 jt + ku 10% x 10thn
= Rp 105 jt
• Palm oil
• Paladium
• Batu bara
Deferred sale
28
29. 4 party sale
Bank Islam
Seller/Pen
jual
Buyer/
Pembeli
Di-beli
Rp 50 jt
Di-jual
Rp 48 jt
Rp 50 jt + ku 10% x 10th
= Rp 105 jt
Product terbaru
Musyarakah Mutanakisah
• Palm oil
• Paladium
• Batu bara
Nasaba/Pengh
utang
Deferred sale
29
30. • A legal trick used by European merchants in the
Middle Ages as a method of circumventing usury,
something that the Church fiercely opposed.
• It was a combination of three separate contracts,
• Individually deemed permissible by the Church, but
which together yielded a fixed rate of return from
the outset.
– For example,
– A might invest £100 in B for one year.
– A would then sell back to B the right to any profit over and above say £30, for a fee of
£15 to be paid by B.
– Finally, A would insure himself against any loss of wealth by means of a third contract
agreed with B at a cost to A of £5.
– The result of these three simultaneously agreed contracts was an interest payment of
£10 on a loan of £100 made by A to B.
Contractum Trinius
- 3 Party contract
TAWARRUQ?
30
31. Trading “Islamic Banking” way (actual)
Bank: Sir, The bank sell you ATM machine for
RM140,000 … (and you say “AGREE”)
Me: Agree
Bank: Sir, you sell back ATM machine to the
Bank for RM70,000
Me: Agree
Bank: Sir, you can now use your credit card
Me: Thank you
31
32. Merely a process issue???
• Do I need the machine?
• Where is the machine?
• Does the machine really exists?
• What is the condition of the machine?
• Is the sale inclusive of the cash in the
machine?
• Possibility of same machine being sold to 2 or
more people at the same time?
32
36. Risk
Management
Islamic Bank’s SOLUTION: Risk Transfer
Supply
Risk
Price
Risk
Weather
Transport
Delivery
Payment
Risk
Profit Rate ??
Risk
• REMOVE THE TRADING
RISK
36
X
37. Bank Pinjaman 100.000 Jualan
Kadar Bunga 10% Keuntungan
Nasaba Peminjam 110.000 Pembeli
Untung 10.000
Status Penghutang Penghutang
….. padahal Allah telah menghalalkan jual-beli
(berniaga) dan mengharamkan riba….
S Baqarah 2/275
….. mereka berkata (berpendapat) jual beli itu
sama dengan riba,
37
38. Islamic Banks and 30.000
abandoned housing projects
• Where is the risk sharing
of the Islamic banks?
• Borrowers facing double
jeopardy
– Rumah baru tidak dapat
– Hutang mesti dibayar
– Sewa rumah juga mesti
bayar
38
39. Reality check
< 3.8%
of Islamic Banks income
derived from profit/loss
sharing products
Research by UPM MBA student
The core product - MURABAHA
39
41. Riba
41
1.
• ….. Allah telah menghalalkan jual-beli (berniaga) dan
mengharamkan riba….
• S Baqarah 2/275
• Bukan saja
– bunga/penambahan/increase; atau
– Elemen2 jual-beli
• Penjual, pembeli, barang, tempat, harga
• Participate dalam risiko transaksi itu juga.
42. Islamic?
Halal?
The business of Banking
^• Pinjaman
• Bunga
• Kredit
• Jual-beli
• Kadar untung
• Deferred sale
Does a “ sales contract”
makes banking halal?
42
2.
Musolla
43. Dengan QF Banking
menjadi HALAL!
America
United Kingdom
Hong Kong
Japan
Europe
Qawaid Fiqhiyyah
BANK RIBA BANK ISLAM
Can prostitution be legalised
by nikah mut’ah using QF?
43
3.
47. Is real Islamic Banking possible
Role Financing scheme Income
1. Trader Sale / Murabaha Profit/Loss sharing
2. Penyewa Lease / Ijarah Rent/Sewa
3. Investor
Invest
/Musyarakah/Mudharab
ah
Profit/Loss-sharing
47
48. Implementation
• Implement the true lslamic finance within the
fiat monetary system
• Concurrently
– Implement the Dinarius system
48
49. Islamic Finance within
the Fiat system
Sistem kewangan
(Monetory System)
Riba
Bank
Islam
Bank
Riba
HARAM
HALAL???
49
Dinar System
50. Islamic Finance
2 types of Fund
1. Safekeeping
1. Charge a fee
2. Free
2. Investment Fund
1. By project
2. Pool of projects
3. Return – Profit or Loss
1. By project
2. Pool of projects
• Financing type
– Musyarakah
– Mudharabah
• No money creation
• Profit sharing 30% to 50%
• Risk sharing
• Still fiat money
50
For
Investment
P 1
P 2
Projects
Safekeeping
only
Mudharib
