Q. In our part of the world, the value of currency continues to fall. If one has some savings and leaves them in cash, they will dwindle in value. If one puts them in some deposit account, is it permissible to take the extra money one is given?
M. Arifuddin, Tabuk
A. Unfortunately, it is true that the value of currency falls so as to make the value of one’s money decrease unless one is able to retain its value through some investment. This is one of the evils of the capitalist system which operates in most countries. However, straightforward interest is not the answer to protect the value of one’s money. It is often the case that inflation outstrips the rate of interest, so that one continues to lose even if one takes interest on one’s bank deposits. Suppose that the rate of interest in a certain country is 8%, and the rate of inflation is 12%, taking interest does not retain the value of one’s deposits.
The way out of this problem is to invest the money in a profit-and-loss-sharing account, in which the bank acts as an investment agent for its clients and tries to get their investments to make returns higher than the rate of inflation. There are such accounts or investment schemes in most countries and one should always resort to these in preference to straightforward bank deposits.