Muslim traders used which economic development to facilitate currency exchange, including early forms of checks
Muslim traders used the development of banking institutions, particularly the establishment of early forms of banks known as "hawala" or "money transfer" networks, to facilitate currency exchange and the use of checks.
Hawala is an ancient system of transferring money, which originated in the Muslim world during the medieval period. It involved an intricate network of trusted intermediaries or "hawaladars" who facilitated the transfer of funds between different locations. Hawaladars would receive money from a person wishing to send it to another location and provide a code or identification to the sender. The sender's recipient at the destination location would then approach a hawaladar, provide the code, and receive the equivalent amount of money.
This system enabled Muslim traders to easily transfer money across regions and facilitated currency exchange. Additionally, the hawala system provided a safer alternative to physically carrying large sums of money over long distances. It became particularly beneficial for Muslim traders who conducted long-distance trade across the expansive Islamic lands from Spain to India.
In addition to hawala, Muslim traders also utilized early forms of checks to facilitate currency exchange. These checks, known as "saqq," were issued by merchants or bankers and enabled the transfer of funds without the need for physical money. These early checks would contain specific details about the transaction, including the issuing party, the recipient, and the amount to be paid. They played a crucial role in reducing the need for physical currency and further facilitated trade and commerce among Muslim traders.
Overall, the development of hawala networks and the use of early forms of checks helped Muslim traders overcome the challenges of currency exchange and enabled them to engage in extensive trade and economic activities across distant regions.