What one family could not make for it itself...

What one family could not make for it itself, it got from [an] other at the weekly market. There, people bartered what they had for what they needed - a chicken for cooking pots, firewood for cloth, and so on. One market day, a stranger showed up and watched. At day's end, the stranger called the townspeople together and said, “Your trading is cumbersome and clumsy! Bring me a cowhide and I'll show you a better way.” Curious, the townspeople brought the hide.

The stranger then cut it into circles: “I've made ten circles for each family. One circle represents one chicken. Use these to trade with each other. You'll see, it will be much easier than carrying your goods to market. And, oh yes, I'll come back in a year to collect this loan I've made. But at that time, each family will owe me eleven rounds of hide instead of ten, as a token of appreciation for the improvement I've brought into your lives.” The town represents the society.

The stranger who brings money -the rounds- into being by lending it out represents banks. The 11th round the stranger requests from each family as payment for services represents the interest payment on the loan. The money does indeed make trading much easier. However, the stranger/bank has created only 10 units of money per family, yet each family must repay 11 units. One of each 10 families will have to go bankrupt to provide the 11th round to all the others.

In a community where cooperation once flourished, extra effort is now required to wrest the eleventh round from a neighbor’s hands; this leaves little time or energy to help anyone out anymore, or even to enjoy a little socializing.[^3] a) Two Types of Interest In Islamic laws, interest (riba) is of two types: Interest in Business and Trade Any business deal that has the following three conditions will be considered riba and haram: (a) The commodity and the price are of same kind.

(b) They are things that are sold by weight. (c) The price is more than the commodity. For example, selling 100 kg wheat for 110 kg wheat would be considered riba and haram no matter whether the payment is on spot or deterred. However, if a person were to sell 100 kg wheat for 110 kg raisins or to sell 100 US dollars for 125 Canadian dollars, then it would be a legitimate transaction because the items are neither the same nor weighed.

This transaction will be valid even if the payment is deferred.