Introduction

Muḥammad ʿUmar Chapra (1933-2017) completed this work during a period of intense scholarly productivity that also produced Islam and the Economic Challenge and a series of research papers that shaped the emerging discipline of Islamic economics. His position as a senior economic adviser at the Saudi Arabian Monetary Agency gave him sustained access to the technical literature of central banking and monetary policy, and his doctoral training at the University of Minnesota had equipped him with the analytical tools of modern macroeconomics. Towards a Just Monetary System, first published in 1985 by the Islamic Foundation in Leicester, was therefore not the work of a scholar writing from outside the discipline he was criticising. It was, rather, the work of a trained economist who had concluded, on both ethical and empirical grounds, that the interest-based monetary system produces outcomes that are structurally unjust and who sought to demonstrate that an Islamic alternative was not only morally superior but also economically coherent.

The book unfolds in three broad movements. The first is a diagnosis of the conventional monetary system: Chapra surveys the mechanisms by which fractional reserve banking creates money, traces the way in which interest rates allocate credit, and argues that the result is a systematic bias in favour of those who already possess wealth and collateral. This, he contends, is not merely an accidental feature of existing institutions but a structural consequence of building the entire financial system around the guaranteed return on capital. The second movement is a critical survey of secular reform proposals, including various schools of thought on monetary reform, Keynesian deficit financing, and the monetarist prescriptions associated with Milton Friedman, showing in each case that they fail to address the root problem because they accept the legitimacy of ribā. The third movement, and the intellectual heart of the book, presents the Islamic alternative: a monetary system in which bank financing is conducted on the basis of mushārakah and muḍārabah, in which profit-and-loss sharing replaces the interest rate as the mechanism of credit allocation, and in which the state's monetary authority is governed by the objectives of the Sharīʿah rather than by the maximisation of GDP growth.

The reception of this work among Islamic economists has been substantial. It remains one of the most cited texts in discussions of Islamic monetary theory, and its core argument, that equity-based finance is more consistent with both Islamic ethics and long-run economic stability than interest-based lending, has been taken up and elaborated by subsequent scholars including Nejatullah Siddiqi, Monzer Kahf, and Abbas Mirakhor. The book also attracted serious engagement from development economists who, without necessarily endorsing its Islamic framework, found Chapra's critique of conventional monetary systems persuasive in significant respects. Critics have noted that the transition from a conventional to an Islamic monetary system raises formidable practical difficulties that the book does not fully resolve, and Chapra himself acknowledges this, treating his proposals as a research programme for the long term rather than an immediately implementable blueprint.

Readers coming to this text should approach it with two kinds of preparation. Familiarity with the basics of monetary economics, including the mechanics of fractional reserve banking, central bank operations, and the money supply, will make the critical first half of the book fully accessible and will allow the reader to appreciate the precision of Chapra's engagement with mainstream theory. Grounding in the Islamic jurisprudence of ribā, ideally through the classical sections of al-Kāsānī's Badāʾiʿ al-Ṣanāʾiʿ or Ibn Rushd's Bidāyat al-Mujtahid, will enrich the reader's engagement with the second half. The book should be read as a contribution to an ongoing scholarly conversation rather than a final word: the decades since its publication have seen significant development in both Islamic finance practice and Islamic economic theory, and the serious reader will wish to trace those developments in subsequent literature. What the book offers that subsequent works have not superseded is the clarity and rigour of its initial diagnosis and the moral seriousness with which it pursues the ideal of a just economic order.