Origins, Evolution and the Future
- Studies in Islamic Finance, Accounting and Governance series
Chapter 13: The Islamic Gold Dinar
Recently, there has been an increasing amount of publications, conferences, even a campaign, about the reintroduction of the Islamic gold dinar. The proponents of this idea, known as the denarists, particularly active in Malaysia, advocate that this country as well as the whole Islamic world ‘urgently’ return to the Islamic gold dinar.1 They argue that if this return is achieved, many ills of modern economies such as rampant inflation, credit crunches, etc., which they associate with the present paper money system, would be solved. Some scholars also argue that since the Prophet used coins, it would be only appropriate for Islamic countries to transform their currencies into gold dinars. In short, what the denarists are doing is to propose an essentially historical system – coinage was the predominant form of currency throughout history – for the future. It is therefore only appropriate that we start the fifth part of this book on the future of Islamic capitalism and finance with this proposal of a common currency for the Islamic world. From barter to coinage Let us start with the last argument that we should reintroduce the gold dinar because it was the sunnah of the Prophet. First of all, we need to understand what the overall purpose of the Prophet was when he condoned the use of coinage. The Qur’an as well as a number of ahadith make it perfectly clear that there was a divine plan to make Mecca the global hub of world commerce.2 For this, the first task was...
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