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The History of Sukuk
The History of Sukuk
The Arabic word sukuk is the plural of the word sakk, meaning "certificate" or "order of
payment."[1] Documentary evidence confirms the use of the word sakk in the early
Islamic caliphates.[2] The Muslim societies of the premodern period used sukuk as
papers that represented financial obligations originating from trade and other
commercial activities.[3] In the earlier theoretical legal works, written instruments of
credit were present. Such written instruments are encountered frequently
in genizah documents.[4] A genizah is a storage place in mosques and synagogues for
documents that may not be put in the garbage because they have God's name written
on them.
Documents in the Cairo Genizah contain fragments that indicate the existence of
the sakk in the 12th century ce, and this money order was remarkably similar in form to
a modern check.[5] It stated the sum to be paid, the name of the payee, the date, and
the name of the issuer.[6]
During the Middle Ages, a sakk was a written vow to pay for goods when they were
delivered, and it was used to avoid having to transport money across dangerous
terrain.[7] As a result, these sukuk were transported across several countries and spread
throughout the world.
Jewish merchants from the Muslim world transmitted the concept and the
term sakk to Europe.[8] The outcome of the trade and transport of these sukuk is that
they were a source of inspiration for the modern-day check, which has a British
background.[9] Yet the modern
English word check appears to have been derived from the Arabic word sakk.[10]
Today, sukuk are known as instruments of the Islamic capital markets. In modern-day
Islamic finance, sukuk refer to Islamic securities with rather distinctive features. One of
the very first definitions of modern-day sukuk was given in February 1988 during the
fourth session of the Council of the Islamic Fiqh Academy in Jeddah, Saudi Arabia.
Resolution No. 30 of the council dealt with investment certificates and, more specifically,
with mudarabah(partnership) sukuk.