To be published in Arabic for Arabi21 :
The notion of the gold Dinar and silver Dirham being introduced as the common currency in the Muslim world, or anyway, in those territories under the control of Islamic parties, has a great deal of appeal.
ISIS made a great deal of hype about their proposed plan to implement the use of Dinars and Dirhams as the exclusive currency in the territory they control, without very much actual follow through in reality.
As a propaganda device, it is useful; and that is really all the proposal is.
Introducing a type of currency associated with the early era of Islam, and which severs connections with the financial system of the rest of the globe, theoretically saving the Muslims from involuntary participation in riba and debt, and extricating the Ummah from what is perceived to be the omnipresent and omnipotent Rothschilds / Illuminati / Masons cabal of conspiratorial supremacy; these are all ideas that are tremendously attractive to Muslims generally, and ISIS fans particularly.
However, there is a growing dissatisfaction with fiat currency, and it is not only the Muslims who are proposing returning to the use of gold and silver coins.
In many ways it is part of a global backlash against the financial manipulation and corruption of banks and the seemingly arbitrary nature of monetary policy, currency valuation and so on. The global financial collapse in 2008 further intensified people’s desire to use money that actually has inherent value instead of reserve notes which can never actually be redeemed.
At least 10 American states have introduced legislation calling for the introduction of gold coins as legal tender. The authors of the legislation cite the constitutional stipulation that “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts”, suggesting thereby that the use of bank notes as currency is actually illegal.
The common thread between the legislators and ISIS, is basically that the proposals actually only amount to posturing before their respective constituents. In the US, they are Tea Party, anti-government, ultra-right wingers, appealing to disgruntled lower middle class voters who have an ingrained distrust of the system, and who might very well welcome the idea of returning to the cowboy days of the wild west. ISIS is appealing to, well, much the same type of segment within the Muslim community.
The publicity about gold Dinars makes the illusion ISIS promotes seem tangible. The problem is, it isn’t; as is evidenced by the lack of any real implementation.
Introducing the use of gold and silver as common currency is not the same as simply exchanging one fiat currency for another. It is not like going from Francs to Euros, or from Euros back to Drachmas.
Because the rationale for using gold and silver is basically that fiat currency is invalid, it is not therefore possible to actually exchange fiat currency for gold coins. Gold has value, paper money is void. What, then, becomes of the “wealth” held by the population in the form of reserve notes? By the intrinsic logic of the argument for gold coins, necessarily, all pre-existing monetary wealth can only be obliterated, not exchanged.
Even if you can bend around this issue by some sort of compromise whereby you allow reserve notes to be transferred into dinars, you are immediately faced with the most obvious problem with the proposal for using gold and silver coins: supply.
Now, addressing the issue of supply would normally be the first step when planning the introduction of gold coins; the fact that neither the US legislators, nor ISIS, apparently gave any thought to how they will mint gold coins without gold, exposes the hollowness of the proposal itself, and reveals it as little more than a media stunt.
There is such a tremendous amount of work you would have to do in order to return to the use of gold and silver currencies, designing how the coins will look, and minting prototypes, would be among the last, not first steps you would take.
If it is only possible to replace fiat currency with gold and silver on a micro level, as opposed to on a macro level, which is the most that can realistically be sought at this point; I don’t really know why it even has to be gold or silver at all.
If you want to establish a new form of currency within a fixed territory using some form of commodity with innate value, and circulation of that currency will take place only within your territorial borders, frankly, it could be anything. Barley, wheat, dates, coffee beans. On the micro level, it makes more sense to encourage a return to the barter system, which is in fact the system most in practice in the lifetime of our Prophet ﷺ