This research describes the use of paper money and Islamic financing. Islamic financing is an Islamic concept. Thus the implementation of Islamic financing in conventional economic systems has lead to certain issues. The issues are prevailing due to the conventional money concepts. Historical Islamic money is analyzed to substitute it with the modern paper money. Islamic monetary systems are currently not prevailing in any country with full implementation. Thus the descriptive methodology is used to analyze the historical records of Islamic monetary systems. It has described the reasons for their use, their benefits and disadvantages. On the basis of the data available and the observations of the present needs of the peasants, it is difficult to obtain the feasibility of metallic coins. It is rather found that the reserves of Paper currency must be maintained in full with real assets like gold and silver for the purpose of backing. It is also found that today’s paper money is also not able to fulfill the true attributes of the currency. Other than this ethical education is also an important factor that must be implemented in this regard. Making an economy interest free does not requires the introduction of Islamic banking only but the changes in the initiators of interest is required. Supervisor: – Mr. Lutufullah Saqib