Hawala is an persian word basically which means 'reference'. This system has been used since ages (even when the present system of governments was not present) to facilitate trade between states. The rules were strict in those times (and even now in most of the cases). Defaulters pay heavy penalties in some other form if not in cash. By the way barter is something different from this and is undoubtedly the oldest form known of trading things. Cash was a replacement for barter. Hawala is related to foreign exchange and paying at different locations..

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