The major religions of the world deplore, condemn and prohibit interest in all its forms. The Manu Smriti of Hinduism categorically expresses sentiments for contempt of usury in chapter 11: verse 62. The Buddhist Jatakas refers to the practitioners of interest as hypocritical ascetics. The Old Testament speaks about the proscription of interest in the books of Deuteronomy 23: 19, Leviticus 25: 36, Exodus 22: 25, Ezekiel 18: 13, Ezekiel 22: 12, Psalms 15: 5, Amos 8: 4-6, Nehemiah 5: 7. The New Testament confirms the prohibition of interest in the Gospels of Luke 6: 35 and Matthew 5: 17. Jesus (Peace be Upon Him) says in the 95th verse of the Gospel of Thomas that if you have money, do not lend it at interest, but give (it) to one from whom you will not get it back. The forbidding of interest in Holy Koran is mentioned in the Chapter of The Romans: verse 39, Chapter of The Family of Imran: verse 130, Chapter of The Women: verse 161 and Chapter of The Heifer: verses 275-281. The prohibition of interest is also mentioned in the Sayings of Prophet Muhammad (Peace be Upon Him). The Apostle (Peace be Upon Him) said…...

“No matter how much is the increment accrued through interest, the eventual outcome is scarcity.”

The Fractional Reserve Banking became a legalized form of economic sacerdotalism at national and international level after the establishment of Bank of England and the foundation of International Financial Institutions (IFIs). The era of this banking has affected the countries and humanity in form of interest payments on debts, business cycles, buying power, global imbalance of payments, increased taxation and positively skewed distribution of wealth. In the financial year of 2014-15, the UK government rewarded £34 billion overall interest on its national debt, which amounted to 4.6% of overall spending according to the Institute for Fiscal Studies (IFS). Pakistan allocated Rs 1360 billion for debt service in fiscal year 2016-17 that would represent 37.56% of FBR’s tax revenue. In Germany, the poor 80% pay one billion Euros in interest to the wealthy 10% per day which amounts to one seventh of German GDP according to Anthony Migchels of Real Currencies.

Economists must keep on questing for an alternative of fractional reserve banking and a system of interest free credit. The Chicago Plan and Chicago Plan Revisited are the masterpieces for abolition of fractional reserve banking and imposition of Full Reserve Banking. The other variants of Full Reserve Banking include Kay’s Narrow Banking, Kotlikoff’s Limited Purpose Banking, Positive Money and New Economics Foundation’s plans for monetary reform. The substitutes also comprise Islamic Banking, Mutual Credit, Constitutional Monetary System of Lincoln and Bradbury Pound initiative of His Majesty’s Treasury in 1914. The best example of interest-free Full Reserve Banking is Jord Arbete Kapital (JAK) bank in Sweden while in the arena of Islamic finance, Akhuwat Model of interest free loans in Pakistan is considered to be more pragmatic than JAK model.The Peasant Land Bank of Russia in 1880 that provided interest-free loans to the liberated peasantry can also be utilized as an interest free model. The system of Rural Cooperative Foundations (RCFs) of Peoples Republic of China which played a pivotal role in the curtailment of rural usury during 1980s can also be employed in usury free arena. In the opinion of this writer, the interest free banking sector that operates on the motto of “no interest on deposits and no interest on loans”   may put to use an entrance fee for catering the daily and monthly needs of the banks and employees. In this manner, the banks shall become the places of public good and services where each and every individual would contribute to the common good and welfare of a society. The entrance fee may be considered as a service charge. Another way of catering the needs of interest free banks is by imposing bank tax on the public by governments. That can only happen when all interest free banks are nationalized.

Stephen Zarlenga in his book “The Lost Science of Money”shows that the monetary reform is more a matter of morality and law than of economics. He also advocates the evolution of monetary department into a fourth branch of government that should work for the common good and nationalization of money creation process which is a precondition for solving the usury problem and its wealth concentration effect. Therefore, it is imperative to the leaders and legislators of various nations to initiate interest write off movement for their respective countries domestically and internationally and promulgate the acts for complete abolition of debt service. Furthermore, the International Financial Institutions (IFIs) like IMF, World Bank and Asian Development Bank (ADB) should initiate interest write off programs for all the developing countries under special initiatives. In 1996, the IMF and World Bank sowed the seeds of the Heavily Indebted Poor Countries (HIPC) for a group of 38 developing countries. But the new initiatives should include the interest write off programs for all the developing countries because it is the interest which is feasting on the flesh and bones of developing world especially those nations that are dependent on others and in which corruption and embezzlement are rampant. The newly founded IFI of Asian Infrastructure Investment Bank can also make use of interest free models for channelizing prosperity and tranquility in underdeveloped nations. As far as the recovery of loans from governments is concerned, it can be dwarfed by galvanizing the debt-equity swap method. Hence, it is concluded that the economic salvation depends on the total elimination of interest and usury based fractional reserve banking.