Jurisprudence review of inside money creation with akl mal bialbatil (the rule of falsehood and incorrect possession of property)

Money creation as the most important function of commercial banks is one of the most controversial issues in Islamic economics. This banking process has been opposed by some jurists and Islamic economists. One of the most important reasons for opposing the money creation process is that this process cause falsehood and incorrect possession of property (akl mal bialbatil). Examining the conformity of money creation with the rule of akl mal bialbatil, the paper considers jurisprudential legitimacy of money creation. Illegal income of banks from money creation, impossibility to return deposits, betrayal of trust, being based the creation of money on usury, violation of property rights and inflation are opponent's reasons that are given for adapting the creation of money to akl mal bialbatil rule. The paper tries to show if the process would be under proper governance and in accordance with specified laws and standards, the money creation will be legitimate. However, some performance of Iranian banks makes money creation an example of this rule. What raises the suspicion of illegitimacy is lack of law compliance and soundness standards of banking activity.