DIFCC as a Complementary Currency to Fiat Money; An Islamic View

Direct interest free credit clearance (DIFCC) or also known as mutual credit will be proposed as a complementary currency to the current fiat money system. This system can be one of viable alternatives to solve the problems that exist in current monetary system. The DIFCC, which is based on a netting system, has been implemented successfully by several countries in the conventional setting, not to replace the current fiat money system but rather as a parallel complementary currency. In this system, the distribution of credit as money will not be monopolized by the commercial banks; rather, the distribution is based on a mutual basis as long as there are products or services that can be offered to others among members. As such, the system is fairer compared to the fiat money system and is free from the prohibited elements in Islamic finance such as riba, gharar and maysir as it requires exchange of real goods and services. This book discusses the viability of implementing the DIFCC model which essentially applies the concept of muqasah (nett-off) and hiwalah (transfer of credit); thus it is a shariah-compliancy model that can be consider as an innovative product in Islamic finance