The concept of legal tender as a source of government financing is not new to modern capitalist economies. Even the known oldest civilization had established coins to pay for the government services and imposed strict measures to ensure the state control of these coinages. The state imposed taxes and make it mandatory to collect taxes in the coins of their choice. Interestingly the concept of legal tender is missing in islam. During the advent of Islam different types of coins circulated such as romans and Iraqi and yemni coins however, Rasool Allah did not issued any legal tenders, neither encouraged nor specified any coins in trading activities as well as for payment of zakat.
Money is states creature and it is abstract. Legal tenders carry not only the intrinsic value it has also economic value and often the economic value and the intrinsic value differed throughout the human history. Severe punishments have been pronounced for those commiting imitations of these legal tenders both in prehistoric times and in modern times. Imitators found to derive value because of this discrepancy. These legal tenders have been notarized as money and are used in exchange for goods and services as well as for unit of accounts and store of value.
In islam, the state finances were primarily provided through zakat system, ushr and taxes and not by issuing tokens or legal tenders. Furthermore, In collecting zakat, ushr and taxes no restrictions as to the form of payment was placed so that only certain coins were acceptable. Even during the draught, Hazrat Omer (PBUH) did not issued coins for the purpose of legal tenders. There were no mandatory requirement of using legal tenders in the course of business, trading activities and payment for services etc. and therefore the role of money as assumed by legal tenders were missing in early islam.
