Digital Currency and Monetary Policy in Islamic Economics: Can Central Bank Digital Currencies (CBDCs) Be Islamically Compliant
Keywords:
Central Bank Digital Currency (CBDC), Islamic monetary policy, Shariah compliance, riba, maqasid al-Shariah
Abstract
Background: This study aims to systematically evaluate whether Central Bank Digital Currencies (CBDCs) can be structured in compliance with Islamic monetary and financial principles, particularly addressing prohibitions of riba (usury) and gharar (excessive uncertainty).
Method: A Systematic Literature Review (SLR) was conducted following PRISMA guidelines, analyzing 47 peer-reviewed studies from Scopus, Web of Science, and Islamic economics journals (2015-2025)
Results: The review finds that conventional interest-bearing CBDCs are non-compliant. However, a zero-return, 100% reserve-backed CBDC operating under wadiah (safekeeping) or qard (loan) contracts is widely permissible. Additionally, smart contract integration can automate zakat collection and qard al-hasan distribution, supporting Islamic monetary policy goals.
Conclusion: This systematic literature review finds that a Shariah-compliant CBDC is theoretically possible within narrow design parameters, but the gap between conceptual compliance and operational Islamic monetary policy remains wide.
References
Aldy, J. E., Barrett, S., & Stavins, R. N. (2003). Thirteen plus one: A comparison of global climate policy architectures. Climate Policy, 3(4), 373–397. https://doi.org/10.1016/j.clipol.2003.09.004
Allen, S., Čapkun, S., Eyal, I., Fanti, G., Ford, B., Grimmelmann, J., Juels, A., Kostiainen, K., Meiklejohn, S., Miller, A., Prasad, E., Wüst, K., & Zhang, F. (2020). Design Choices for Central Bank Digital Currency: Policy and Technical Considerations (No. W27634; p. w27634). National Bureau of Economic Research. https://doi.org/10.3386/w27634
Al-Thani, M. (2026). Hybrid Commodity–Financial Instrument Basket as An Exchange Rate Regime and Currency Backing: A New Hybrid Framework for Monetary and Financial Stability. SSRN. https://doi.org/10.2139/ssrn.5919603
Brundage, M., Avin, S., Clark, J., Toner, H., Eckersley, P., Garfinkel, B., Dafoe, A., Scharre, P., Zeitzoff, T., Filar, B., Anderson, H., Roff, H., Allen, G. C., Steinhardt, J., Flynn, C., hÉigeartaigh, S. Ó., Beard, S., Belfield, H., Farquhar, S., … Amodei, D. (2018). The Malicious Use of Artificial Intelligence: Forecasting, Prevention, and Mitigation (Version 2). arXiv. https://doi.org/10.48550/ARXIV.1802.07228
Carvalho Silva, E., & Mira Da Silva, M. (2024). Central Bank Digital Currency Design Concepts: A Multivocal Literature Review. Proceedings of the 12th Euro American Conference on Telematics and Information Systems, 1–12. https://doi.org/10.1145/3685243.3685250
Design Principles and Best Practices of Central Bank Digital Currency. (2021). International Journal of Performability Engineering, 17(5), 411. https://doi.org/10.23940/ijpe.21.05.p1.411421
Dixit, V., Shailesh, A., Mishra, S., & Verma, R. (2025). Adoption of Central Bank Digital Currency in India: A Structural Model Using ISM. NMIMS Management Review, 33(4), 276–288. https://doi.org/10.1177/09711023251370836
Faizi, F. (2026). Shariah-compliant central bank digital currency: Proposed design and implementation. Journal of Banking Regulation, 27(2), 15. https://doi.org/10.1057/s41261-026-00315-3
Hamza, H. (2025). Reforming the Monetary System: Should it be the Core Motivation of Sharia-compliant CBDC? Journal of Islamic Economics and Finance Studies, 6(2), 24–47. https://doi.org/10.47700/jiefes.v6i2.12341
Inam Ul Mansoor, S. (2025). Islamic Law in the Age of Blockchain: Exploring Shari’ah Compliant Cryptocurrencies and Digital Assets. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.5340253
Jin, S. Y., & Xia, Y. (2022). CEV Framework: A Central Bank Digital Currency Evaluation and Verification Framework With a Focus on Consensus Algorithms and Operating Architectures. IEEE Access, 10, 63698–63714. https://doi.org/10.1109/ACCESS.2022.3183092
Muhammad M Said. (2024). Cash Waqf Based on CBDC in Countering the Financing of Radicalism and Terrorism in Indonesia. JIPOWER : Journal of Intellectual Power, 1(3), 19–37. https://doi.org/10.63786/jipower.v1i3.28
Pearson, S., & Benameur, A. (2010). Privacy, Security and Trust Issues Arising from Cloud Computing. 2010 IEEE Second International Conference on Cloud Computing Technology and Science, 693–702. https://doi.org/10.1109/CloudCom.2010.66
Rupita, N., & Suryadi, N. (2026). Towards an Islamic Central Bank: The Integration of Islamic Maqashid Values in Modern Monetary Policy. At-Tasyri: Jurnal Hukum Dan Ekonomi Syariah, 7(01), 98–101. https://doi.org/10.55380/tasyri.v7i01.1279
Smolo, E. (2026). Islamic Finance in the Digital Age: Fintech as a Civilizational Tool. Religions, 17(2), 218. https://doi.org/10.3390/rel17020218
Tallberg, J. (2002). Paths to Compliance: Enforcement, Management, and the European Union. International Organization, 56(3), 609–643. https://doi.org/10.1162/002081802760199908
Zafar, A. (2026). Privacy as institutional design: A legal-technological analysis of CBDC governance and compliance. Computer Law & Security Review, 60, 106258. https://doi.org/10.1016/j.clsr.2025.106258
Zahid, Z., Amin, R., Khalil, I., Mohammed, B. A. K., & Arif, S. (2025). Regulating Digital Currencies in the EU: A Comparative Analysis with Islamic Finance Principles Under MiCA. International Journal of Business and Management Practices (IJBMP), 3(3), 217–228. https://doi.org/10.59890/ijbmp.v3i3.42
Zaidan, E., & Ibrahim, I. A. (2024). AI Governance in a Complex and Rapidly Changing Regulatory Landscape: A Global Perspective. Humanities and Social Sciences Communications, 11(1), 1121. https://doi.org/10.1057/s41599-024-03560-x
Zull Kepili, E. I., & Nik Azman, N. H. (2025). Islamic finance and NCCs: Comparative insights from Malaysia, Indonesia, and El Salvador. ‘Abqari Journal, 32(2). https://doi.org/10.33102/abqari.vol32no2.668
Allen, S., Čapkun, S., Eyal, I., Fanti, G., Ford, B., Grimmelmann, J., Juels, A., Kostiainen, K., Meiklejohn, S., Miller, A., Prasad, E., Wüst, K., & Zhang, F. (2020). Design Choices for Central Bank Digital Currency: Policy and Technical Considerations (No. W27634; p. w27634). National Bureau of Economic Research. https://doi.org/10.3386/w27634
Al-Thani, M. (2026). Hybrid Commodity–Financial Instrument Basket as An Exchange Rate Regime and Currency Backing: A New Hybrid Framework for Monetary and Financial Stability. SSRN. https://doi.org/10.2139/ssrn.5919603
Brundage, M., Avin, S., Clark, J., Toner, H., Eckersley, P., Garfinkel, B., Dafoe, A., Scharre, P., Zeitzoff, T., Filar, B., Anderson, H., Roff, H., Allen, G. C., Steinhardt, J., Flynn, C., hÉigeartaigh, S. Ó., Beard, S., Belfield, H., Farquhar, S., … Amodei, D. (2018). The Malicious Use of Artificial Intelligence: Forecasting, Prevention, and Mitigation (Version 2). arXiv. https://doi.org/10.48550/ARXIV.1802.07228
Carvalho Silva, E., & Mira Da Silva, M. (2024). Central Bank Digital Currency Design Concepts: A Multivocal Literature Review. Proceedings of the 12th Euro American Conference on Telematics and Information Systems, 1–12. https://doi.org/10.1145/3685243.3685250
Design Principles and Best Practices of Central Bank Digital Currency. (2021). International Journal of Performability Engineering, 17(5), 411. https://doi.org/10.23940/ijpe.21.05.p1.411421
Dixit, V., Shailesh, A., Mishra, S., & Verma, R. (2025). Adoption of Central Bank Digital Currency in India: A Structural Model Using ISM. NMIMS Management Review, 33(4), 276–288. https://doi.org/10.1177/09711023251370836
Faizi, F. (2026). Shariah-compliant central bank digital currency: Proposed design and implementation. Journal of Banking Regulation, 27(2), 15. https://doi.org/10.1057/s41261-026-00315-3
Hamza, H. (2025). Reforming the Monetary System: Should it be the Core Motivation of Sharia-compliant CBDC? Journal of Islamic Economics and Finance Studies, 6(2), 24–47. https://doi.org/10.47700/jiefes.v6i2.12341
Inam Ul Mansoor, S. (2025). Islamic Law in the Age of Blockchain: Exploring Shari’ah Compliant Cryptocurrencies and Digital Assets. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.5340253
Jin, S. Y., & Xia, Y. (2022). CEV Framework: A Central Bank Digital Currency Evaluation and Verification Framework With a Focus on Consensus Algorithms and Operating Architectures. IEEE Access, 10, 63698–63714. https://doi.org/10.1109/ACCESS.2022.3183092
Muhammad M Said. (2024). Cash Waqf Based on CBDC in Countering the Financing of Radicalism and Terrorism in Indonesia. JIPOWER : Journal of Intellectual Power, 1(3), 19–37. https://doi.org/10.63786/jipower.v1i3.28
Pearson, S., & Benameur, A. (2010). Privacy, Security and Trust Issues Arising from Cloud Computing. 2010 IEEE Second International Conference on Cloud Computing Technology and Science, 693–702. https://doi.org/10.1109/CloudCom.2010.66
Rupita, N., & Suryadi, N. (2026). Towards an Islamic Central Bank: The Integration of Islamic Maqashid Values in Modern Monetary Policy. At-Tasyri: Jurnal Hukum Dan Ekonomi Syariah, 7(01), 98–101. https://doi.org/10.55380/tasyri.v7i01.1279
Smolo, E. (2026). Islamic Finance in the Digital Age: Fintech as a Civilizational Tool. Religions, 17(2), 218. https://doi.org/10.3390/rel17020218
Tallberg, J. (2002). Paths to Compliance: Enforcement, Management, and the European Union. International Organization, 56(3), 609–643. https://doi.org/10.1162/002081802760199908
Zafar, A. (2026). Privacy as institutional design: A legal-technological analysis of CBDC governance and compliance. Computer Law & Security Review, 60, 106258. https://doi.org/10.1016/j.clsr.2025.106258
Zahid, Z., Amin, R., Khalil, I., Mohammed, B. A. K., & Arif, S. (2025). Regulating Digital Currencies in the EU: A Comparative Analysis with Islamic Finance Principles Under MiCA. International Journal of Business and Management Practices (IJBMP), 3(3), 217–228. https://doi.org/10.59890/ijbmp.v3i3.42
Zaidan, E., & Ibrahim, I. A. (2024). AI Governance in a Complex and Rapidly Changing Regulatory Landscape: A Global Perspective. Humanities and Social Sciences Communications, 11(1), 1121. https://doi.org/10.1057/s41599-024-03560-x
Zull Kepili, E. I., & Nik Azman, N. H. (2025). Islamic finance and NCCs: Comparative insights from Malaysia, Indonesia, and El Salvador. ‘Abqari Journal, 32(2). https://doi.org/10.33102/abqari.vol32no2.668
Published
2025-10-02
How to Cite
Sofiana, R., & Utama, S. (2025). Digital Currency and Monetary Policy in Islamic Economics: Can Central Bank Digital Currencies (CBDCs) Be Islamically Compliant. Sharia Economic and Management Business Journal (SEMBJ), 6(3), 123-141. https://doi.org/10.62159/sembj.v6i3.2186
Section
Articles
Copyright (c) 2025 Ratna Sofiana, Satria Utama
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
The authors who publish in the journal agree to the following terms:
- The authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- The authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- The authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
- The authors warrant that the article is original, written by stated author(s), has not been published before, contains no unlawful statements, does not infringe the rights of others, is subject to copyright that is vested exclusively in the author and free of any third-party rights, and that any necessary written permissions to quote from other sources have been obtained by the author(s).
Jurnal Ekonomi dan Bisnis Manajemen Syariah (SEMB-J), Yayasan Darussalam Bengkulu is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Based on a work at https://siducat.org/index.php/sembj/.
