Central Bank Digital Currencies (CBDCs): An Evaluation from Islamic Law and Islamic Economics Perspectives

Central Bank Digital Currencies (CBDCs) garnered significant attention from economists, policymakers, and financial institutions worldwide. As a digital currency issued and managed by central banks, CBDCs are being explored by 130 countries, with 11 fully launched. The development of CBDCs has been accelerated by technological advancements and the global Covid-19 pandemic. Within the Organization of Islamic Countries (OIC), CBDC exploration varies in speed and interest among stakeholders. While most CBDC initiatives are still in the pilot phase, there is no universally agreed upon standardized format. This article evaluates the issue of CBDC from both Islamic law and economics perspectives by examining CBDCs' status as money in Islamic law and explores key aspects from the Islamic economics perspective, including monetary sovereignty, money market monitoring, and fiscal policies. Although CBDCs hold great potential, their successful implementation requires careful consideration of regulatory and technological challenges while adhering to Islamic principles. Integrating CBDCs into an Islamic economic framework offers an opportunity for sound economic development that aligns with Islamic values. Further research focusing on CBDC pilot projects and Islamic economic model designs is recommended to gain a deeper understanding of their implications.