Abstract The time value of money is not appreciated in Islam. It is forbidden to lend money and expects the money paid back in return with some interest. Islamic law claims that this form of practice is illegal and is the reason why many nations in the world are suffering. Islamic scholars say that the time value of money and the interest rates imposed on money lent are the reasons why the poor keep on getting poor and the rich richer. These scholars claim that the ‘modern’ form of lending is responsible for the financial crises that the world has experienced in the twentieth century. Islam does not recognize the need of charging more for credit sales but instead sees it fit to have humane and ethical standards that protect and prevent exploitation of various parties by others. Islamic credit is far more flexible in comparison to conventional lending since the credit price is free to fluctuate according to market conditions. The Islamic approach to money has been found to offer new ways in which money should be looked at. Capitalism and globalization often look for answers in new things, in new ideas and in new concepts but on the other hand, fail to gain understanding from what already exists. The Islamic approach to money is indeed a more ethical way in comparison to the capitalist approach. Even as the world progresses and people become free to trade, free to move and free to set their own rules a new definition of money and interest is needed. Introduction History of money Money is a very useful commodity and has become the main form of exchange all over the world. The money came about as a solution to a need that people had; how to trade and exchange goods and services in a fair and effective way. With the introduction of money came banks and financial institutions. The banks and private lenders later introduced the concept of interest; the generation of additional revenue from money. The development of money in most markets started with gold coins and objects that had an inherent value. This made trade and work easier for people as they were able to avoid the tiring and cumbersome processes involved with barter trade. The early currencies were made of precious metals and this meant that the money itself could be sold or exchanged for something else of value (Surhone, 2010). With the introduction of money made from precious metals, business and trade was able to boom. People all over the globe changed over from barter trade to monetary trade. With the thriving economic conditions came the need to store these monetary reserves. This was mainly due to security, convenience and storage reasons. This is where the banks came in and they were able to provide storage and transportation services for people. Fig.1: Ancient Arabic gold coins The banks had huge monetary reserves and this meant that they had enough capital to fund and finance commercial projects. The banks went into financial lending where they lent money to people and in turn, got paid the principal amount with some added interest. This is where the commercialization of money was started; by banks and lending institutions. Throughout history, banks have lent money to people in return for some interest. Money i