Solutions for Compensating the Currency Depreciation in Bank Deposits

Inflation is an undesired and economically culturally, and politically destructive phenomenon. Almost all types of banks deposits are vulnerable against this problem. In an inflationary environment, if the purchasing power is not taken into consideration on repayment of deposits, depositors will suffer a substantial loss resulting to a fall in savings, investment, production and public welfare and an inefficient employment of saving which deepen the inflation more. If, on repayment, the purchasing power of the people is leaved unchanged savings, deposits, investments, and production will increase, depositors’ real profit will become positive and the inflation will be contained making the people well off and leading the society towards achieving the ideal goal of social and economic justice.From a fiqhi perspective, compensating currency depreciation in the form of conventional contracts is illegal. So is there any contract or practical fiqhi consistent solution to compensate the depreciation? Some jurists allow the agreement on compensation under the terms and contracts. The studies suggest that these models are illegal from a jurisprudential point of view. However, to compensate the depreciations of the deposits, following practical solutions are proposed:a) application of Special Drawing Right (SDR);b) Creation of a national value unit;c) Good money standard;d) application of low foreign currency or gold preserve by bank;e) establishing specialized investment companies by banks.If these solutions are consistent with Islamic standards and economically and practically justifiable, they may be employed in the banking system and in public and business financial and monetary relations.