e-dinar, a precious metal alternative to modern monetary systems

e-dinar is an Internet payment and exchange system that facilitates online transactions 100% backed by physical gold and silver. The name of the service doesn’t imply that payments within the system are made with dinar, actually it relates to the religious views of Moslems. Abu Bakr ibn Abi Maryam reported that he heard the Messenger of Allah, may Allah bless him and grant him peace, say: "A time is certainly coming over mankind in which there will be nothing [left] which will be of use save a dinar and a dirham." (The Musnad of Imam Ahmad ibn Hanbal). e-dinar is international and accept funds in USD, Euro and AED.

How it all began

The original e-dinar company was founded in August 2000 in Labuan, Malaysia by Zeno Dahinden, of Switzerland, Dato Abdul Rahman Shariff, of Malaysia, and Fernando Vadillo, of Spain. The incorporation was purposely timed to precede a large e-dinar conference at the Islamic Arts Museum Malaysia (IAMM) in Kuala Lumpur, November 2000. At that event, both Dr. Tun Mohamed Mahathir (at that time Prime Minister of Malaysia) and his successor Datuk Seri Abdullah Ahmad Badawi received complementary sets of gold dinars and opened their e-dinar accounts publicly on stage. They were among the very first and most illustrious e-dinar account holders.

In fact the e-dinar company minted their own silver coins and gold coins in 1992. As reported by Zeno Dahinden at those times dinars and dirhams were hammered by hand. The objective of the founders was to allow common customers to possess the real value just as the mighty of this world do. The idea was prompted by the consciousness of the shortcomings associated with current monetary scheme when banks issue heaps of paper money out of nothing inasmuch as paper money is actually created from debt. Since debt is an obligation and not a value, new money draws its value from existing money and thereby devalues the currency and creates inflation says Dahinden.

Thus e-dinar team was determined to ‘help prepare the grounds for renewed monetary discipline in the face of impending financial collapse, e.g. through the ‘subprime’ fall-out’.

In late 1998 the company made the first contract with Douglas Jackson (CEO of e-gold). Then in 1999 Zeno Dahinden visited Doug Jackson in Florida where they drafted an agreement that would make e-dinar a self-contained front-end sitting on top of the e-gold database.

After finalizing a partnership with e-gold in 2000, they established their own mints in the United Arab Emirates and Indonesia. Near the end of 2003, half of the company was bought out by an unknown international corporation in the Middle East, and in July 2004 they formally separated from e-gold. The main reason for separation was the company ambition for realization of their full potential.

Under the partnership with e-gold the company depended on e-gold’s backend database and processes (e.g. bullion purchase and storage) which was found to be an obstacle in further progress. Thereby e-dinar team made a decision to separate from e-gold and in order to realize this aim they developed their own backend software and established their own bullion procurement and storage processes.

At bottom of fact

[img_assist|nid=10738|title=|desc=|link=none|align=left|width=637|height=640]The main difference of e-dinar service is that e-dinar is for the time being used primarily as a store-of-value rather than a payment system. e-dinar accounts promoted as online savings accounts which offer an alternative to Islamic banking.

Every e-dinar account holds two balances, an e-dinar balance (gold) and an e-dirham balance (silver). Each e-dinar electronic unit corresponds to an exact, fixed weight of 4.25 grams of pure 24 carat gold. Each e-dirham corresponds to an exact, fixed weight of 3 grams of .999 silver. The gold balance is displayed in e-dinar, in ounces and in grams of 24 carat gold. For silver, the balance is displayed in e-dirham, in ounces and in grams of 999 silver. Both gold and silver balances are also displayed in USD, EUR, AED, GBP, CHF and JPY.

The physical gold and silver bullion backing e-dinar and e-dirham units are always equivalent or larger than all electronic e-dinar and e-dirham in circulation. The physical gold and silver bullion is held securely in internationally renowned bullion repositories.

The value of an e-dinar and e-dirham account moves proportionally to the price of gold and silver. When a customer funds an account with e-dinar or e-dirham it means that he/she buys physical gold or silver. Thus the account balance is recorded in gold and silver (by weight). All other currencies which are displayed in the account balance fluctuate with changes in the gold and silver prices.

Customer acceptance policy

The registration procedure is not as complicated as the qualification for transactions or deposit operations. To open a new account you need to click on the corresponding ‘sing-up’ button and start filling in the registration form. But first you have to create your username and password as well as to agree to the company’s Customer Identification and Acceptance Policy.

[img_assist|nid=10742|title=|desc=|link=none|align=left|width=640|height=619]In the form you should provide your name, address, contact numbers and e-mail. Besides, you can also change your password and set up account preferences.

As a new account holder a customer is required to send e-dinar certified copies of his/her proper legal identification before wiring funds to his/her account.

The company does not publish their bank details on the e-dinar website. Hence a customer has no choice except to undergo e-dinar’s Customer Acceptance Process.


All e-dinar customers must - in addition to their contact information entered online - send e-dinar a certified photocopy of their passport or ID card before the company releases its bank contact details to them.

Small account holders who plan to buy less than 1000 USD in total gold and silver can scan and email their certified copies of passport or ID card. Large account holders who plan to buy more than 1000 USD in total gold and silver need to send their certified copies by postal mail.

Such a strict Customer Acceptance Policy and transaction control are intended to discourage unwanted elements before they enter the system. e-dinar’s Customer Acceptance Policy is based on GoldMoney’s policy which is among the strictest in the industry.

Without any verification of the customer’s identity no transaction is possible within e-dinar system.

Your e-dinar account

[img_assist|nid=10743|title=|desc=|link=none|align=left|width=640|height=640]Opening a new account is free. A customer can open as many accounts as he/she needs. Every account will have its unique account number. Once the account is created a holder can receive funds from other users.

Funding an account can be of two ways. Either a user receives an e-dinar/e-dirham payment into his/her account from another e-dinar user or he/she can buy e-dinar/e-dirham for his/her national currency. To do this a customer needs to use the "buy gold/silver" account function.

Now when you have an e-dinar account you can spend, sell and redeem you e-dinars and e-dirhams.

The Spend function allows you to make payments from e-dinar/e-dirham accounts to other e-dinar/e-dirham accounts. The spend amount will always be calculated in e-dinar/e-dirham. Yet you have option to enter the spend amount in a national currency. The amount of e-dinar/e-dirham actually spent will be calculated according to the current exchange rate.

With sell gold/silver function you are allowed to convert e-dinar/e-dirham into major national currencies by filling out the attached form and transferring the desired amount of e-dinar/e-dirham, to the e-dinar out exchange account. You will then receive a bank wire to your bank account in the national currency of your choice. The costs for the wire transfer are charged to your account.

The redeem or get coins option means that you can relinquish some e-dinar/e-dirham by taking delivery of physical gold and silver coins. As already mentioned above one electronic e-dinar corresponds to one physical gold dinar while one physical silver dirham costs approximately 30% more than an electronic e-dirham (due to proportionally higher minting costs). e-dinar will naturally send your dinars and dirhams to your postal address (additional shipping and handling fees apply).

When you buy gold or platinum you should pay the spot price and 2% spread while for silver you will pay 3% spread along with the spot price. The storage of you funds will cost you 1% a year. This fee is covering storage and insurance costs. The storage fee is calculated based on the average account balance and is deducted monthly from the account.

When you send money to another user of e-dinar you won’t be charged any fee. A processing fee is deducted from the recipient. Transaction fee is 1% of the transferred amount, but not more than 0.015 e-dinar (~ 1.90 USD) for transactions in gold or 0.5 e-dirham (~ 0.88 USD) for transactions in silver.

There is no minimum transaction size. e-dinar can be used for micro payments as well as large transactions.

Online transactions (spends) are not reversible. Once the transaction is complete, the sender cannot undo it. Accidental entry is highly unlikely. The system gives you a preview of all transaction orders prior to confirmation. Preview allows you to review applicable Exchange Rates, calculations, and other order information, to be certain the details are acceptable to you before committing the transaction. After preview, you are presented with an explicit confirming button to commit the transaction.

Islamic Mint

This write up of the Islamic Mint explains exactly who the Islamic Mint are and what they deal in and is well worth while reading before you decide to buy any gold or silver coins from the Islamic Mint.

As always, it is prudent to do one's own due diligence before buying gold from any gold dealer or mint.

Who are the Islamic Mint
The Islamic Mint is situated in Dubai, United Arab Emirates. It produces the Islamic Dinar and Islamic Dirham.

Castiñeira is marketing director of the Islamic Mint, a private institution dedicated to reviving as international currency the coinage described in the Koran - the gold dinar and silver dirham.

E-dinar's British COO, Yahya Cattanach, and his family share a communal condo with Castiñeira in the comfortable Jumeirah district of Dubai. The company's Spanish president, Umar Ibrahim Vadillo, is also the president of the Islamic Mint. And finally, uniting all three men, as well as e-dinar's Swiss CEO, Malaysian CFO, and German CTO, is the fact that all are high-placed members of the Murabitun movement, a modern, Western offshoot of Sufi Islam and possibly the only religious sect in history whose defining article of faith is a financial theory.

The e-dinar's primary unit of account is 4.25 grams of gold. Officially, the Islamic Mint and e-dinar are separate organizations, but they're actually the off- and online divisions of a single project, joined by ideological and personal ties.

Their website is www.e-dinar.com

They are associated with E-Dinar Ltd who actually sell the coins. E-Dinar Ltd are based in Malaysia and Dubai.

They first began minting Minted first gold dinar and silver dirhams in 1992. In 2000 they Established formal organization and incorporated e-dinar Ltd in Labuan, Malaysia with a authorized share capital of USD 1.5 million. They received permission to mint coins in Dubai and have established mints in UAE and Indonesia.

They also have a Malaysian site at www.islamicmint.com.my.

More information about the Islamic Currency & Mint
In the beginning the Muslims used gold and silver by weight and the dinar and dirhams that they used were made by the Persians.

According to the Islamic mint website:

"Umar Ibn al-Khattab (second caliph of the Muslim also known as Abu Hafs Umar ibn al-Khattab al-Adawi, reigned from 634 to 644 CE) established the known relationship between them based on their weights: "10 dirhams must be equivalent to 7 dinars (mithqals)". The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. In the year 75 AH (695 CE) Caliph Abul Walid Abd al-Malik ibn Marwan (reigned from 685 to 705 CE) ordered Al-Hajjaj to mint the first Dirhams and in 77 AH (696 CE), the first standard gold Dinar were minted. In the next years these coins were minted in all the regions of Islam. He ordered that the coins should be stamped with the sentence: "la ilaha ill' Allah" (Allah is Unique, Allah is Eternal). He also ordered to remove human figures and animals from the coins and to be replaced with letters. Gold and silver coins remained official currency in Islamic regions until the fall of the Caliphate in 1918. This indicates that the Islamic Gold Dinar was the currency of the Muslim community from its first years right up to the fall of the Ottoman Empire (Osmanli dynasty)."

Dr. Umar Ibrahim Vadillo, Pioneer of the Dinar's reintroduction and director of E-Dinar Ltd, is known as the designer of the current coins. He is also the author of books, written on Islamic finance and Economics. Among his books are "The Fatwa on Paper Money", "The Return of the Gold Dinar" and "The Esoteric Deviation in Islam", published by Medinah Press.

Islamic Mint Products
The wealth in these coins can be calculated directly by weight for zakah, marriage and hudud according to Islamic teaching and implementation.
Weights and Measures:
The Islamic Dinar 22K gold (.917) is equivalent to 4.25 grams 23mm diameter.
The Islamic Dirham 0.925 pure silver equivalent to 2.975 grams 25mm diameter.
Besides 1 Dirham in silver and 1 Dinar gold coins, 5 Dirhams in silver and 2 Dinars in Gold also exists. The silver coins show the Kaaba. (All the Muslims face the Kaaba during their five time prayers in a day, which is the second pillar of Islam. ) The gold coins also show the tomb of Muhammad.

The Islamic Dinar is now currently minted in four countries and being privately used in more than 22. During 1982, the Islamic Development Bank was prescribed by the IMF as a holder of Special Drawing Rights (SDR's). SDR's are a unit of IMF currency tied to gold. The Islamic Dinar, which is made of gold is a unit of account at the Islamic Development Bank, equal in value to one SDR.

It is possible to buy Dinar gold coins from the various Islamic mints such as e-dinar Ltd. You will need to open an account and provide the usual ‘Know your Customer’ proof of ID, or alternatively one could also possible purchase from the principal contact person of Islamic Mint: Mr. Thani Alromaithi. email: info@e-dinar.com. But I dare say he will also want to know with whom he is dealing.

In the beginning of 2008 the Islamic Mint introduced two more coins: 10 Dirhams in .999 Silver having 30g and 8 Dinar 22K gold having 34g. These gold and silver coins are also available for sale. Their main office is at Abu Dhabi and regional branch and private mint located in Dubai. Their functional website is at www.e-dinar.com/ and current prices can be seen at www.e-dinar.com/cgi/shop.cgi.

You might also be able to get them at gold and silver dealers.

Last Word on the Islamic Mint
The Islamic gold and silver coins are very impressive and outstanding in quality and the cost is not much above spot. But they are really designed specifically for use in the Islamic World.

When it comes to investment in gold and silver, one would be better off looking at gold bullion in the form of bars or even buying gold and silver from such places as goldmoney.com for example, for investment purposes.

More information on Islamic gold coins can be found at: Islamic Gold Coins.

If you have bought any Islamic silver bullion coins from any dealers please feel free to leave your feedback on the quality of service and products including any online complaints and special attention or service given by any dealers of Islamic gold and silver coins.

FREEDOM

The question of money
is primarily a question about freedom.

When people were free to choose
they universally chose gold and silver

Now we are forced to accept
the system of artificial money, whose
legal value is determined by the State.

"Money is any merchandise commonly accepted
as a medium of exchange."
said Imam Malik

We propose to return to gold and silver
They are part of the Revelation and the Sunna
They offer stability and order.
They are the end of political money
They are the end of money manipulation

THEY REPRESENT FREEDOM

The EFFECT of the Dinar and the Dirham on Business

Paper-money, which does not render any service except in
exchange for something productive, is made artificially
productive by interest.

On the other hand, every genuine enterprise, like the use of a
house or a manufacturing process, can only be productive by
the services rendered to society.

Interest competes and wins over genuine enterprises profitable to
society. The genuine business has to pay the interest out of the
profit from a genuine service to society, but the bank makes
profit out of the interest through the artificial expansion of the
money lent.

The final result is that the higher the interest rates the greater the
destruction of 'less competitive" businesses

The EFFECT of the return of the dinar and the dirham will be

The shift of capital investment from the most "speculative areas"
to the more productive areas.As a result a new landscape
associated with the dinars and the dirhams will re-emerge, that
is, the world of Islamic Trading

A new re-start for trading will come about through the
restoration of two of its most representative but losts
institutions:
the market-place which will replace supermarkets
and
the caravans which will replace monopolistic distribution

And the return of the guilds, that is, associated independent
intelligent workteams, in which the relationship
master/apprentice will replace employer/employee

The EFFECT of the Dinar and the Dirham on the Real Estate

Today you want to buy a house and a bank will offer you a
mortgage. This is how the ring distorts the operationthe house

The annual rent of this house is 10% of its value
but,...
the same money is offered by the bank at 5%, which considering
inflation is a bargain!

Why would the bank be so generous, when it could rent the
house and obtain the house plus a higher 10% return?
This is the paradox of the ring.
Out of that 5% interest the bank will make a 100% profit with the
mathematics of the ring.

The borrower thinks that the interest is better than paying the
rent, the bank makes a higher profit out of expanding money
who loses? All the holders of the newly inflated currency by its loss of
value (inflation).

THE HIRE-ABILITY OF MERCHANDISE

A house can be rented, it is a hireable merchandise
Money cannot be rented, it is a non hireable merchandise

Profit and rent come only from real services to society -this is the
end of speculative economy and the beginning of real
prosperity to society.

This is because investment will have to be directed towards real
services, instead of being drawn by the artificial profit of the
ring which like a parasite lives off real services.Without the
mortgage, housing prices will simply find a new stability
established by the equilibrium between the offer and a new
demand based on what people can really pay.

Imam Sahnun wrote in the great Madinan text, "Mudawwana al-
Kubra", 12:46
"Money is something which it is not permissible to hire."

The Practical Use of the Dinar and the Dirham

In the beginning, networks of shops and individuals which will
accept the gold and silver coins as a medium of exchange will be
distinguished by a sign or window sticker.

Just like Visa or American Express cards started to be introduced
in society. Each shop will have the sticker indicating that they
accept the dinar and the dirham.

The transportation of gold and silver will be facilitated by a
network of agencies that will allow money to be sent to any
corner of the world. It will operate by a simple method of
book-keeping. Just like the company Inter-flora makes available
flowers all over world without needing to send the flowers
physically.

Equally the gold and silver could be made available in different
parts of the world although only the balance between the
different agencies needs to be physically transported

A future use of cash cards would allow you to retrieve gold and
silver from your own account in any shop of the network.

Under the strong supervision of the WITO, World Islamic
Trading Organisation, companies will be able to issue cards
which let you retrieve money just like modern cashiers allow
you to collect paper money

The TRANSFERRAL of gold and silver to a third party by
means of special debit cards. This is the most delicate of all
questions, since many forms of transferral of money are not
allowed in Islamic Law and open the door to fraudulent abuse of
trust.

That is why any step in this direction will need to be strongly
monitored by WITO or some civil authority, to prevent the
account keeper from turning into a bank by lending money and
/or creating money out of nothing by expanding the credit.

MONEY, A COMMODITY OR A SYMBOL

Until the beginning of the twentieth century the most popular and
universal medium of exchange was gold and silver coins.

Currency was considered to be as flexible as any other
merchandise. People responding to their own particular needs
demanded the coins and also offered them, thus their market
value was established daily.The debate that divides the
defenders of gold and silver and their adversaries is not new, it
has been going on for more than three centuries.

Today money is represented by pieces of paper as non-
redeemable official notes whose quantity can be increased at
will.

This symbolic money originated from private contracts or
promises to pay issued by goldsmiths and later by banks.

Money is a symbol and not a commodity:

"It is the denomination of the currency of the money that men
regard in bargaining, not the quantity of silver. It is the public
authority upon the metal that makes it money" (Nicolas Barbon,
1696)

"Money is a symbol of a thing and represents it" (Charles-Louis
de Montesquieu, 1748)

"Money is the symbol of all commodities" (François-Veron de
Forbonnais, 1776)

"All monetary functions which are usually performed by gold
and silver coins, may be performed as effectively by a
circulation of inconvertible notes having no value but that
ficticious and conventional value... they derive from law"
(John Fullarton, 1848)

Money is a commodity and not a symbol:

"Silver and gold, coined or uncoined, though they are used for a
measure of all other things, are no less a commodity than oil,
tobacco, cloth or stuffs" (Josiah Child, 1689)

"Money is not a mere symbol, for it is itself wealth; it does not
represent values, it is their equivalent" (Guillaume-François Le
Trosne, 1777)

"Gold and silver have value as metals before they are money.
The coins which today have a merely ideal denomination are in
all nations the oldest; once upon a time they were all real, and
because they were real people reckoned with them." (Fernando
Galiani, 1803)

"The false definitions of money may be divided in two main
groups: those which make it more and those which make it
less, than a commodity" (Wilhelm Roscher, 1858)

Some Common FALSE OBJECTIONS to Gold & Silver as a
medium of exchange

In any debate about gold and silver, certain objections are
repeatedly raised by opponents of monetary freedom, even
though those objections have been refuted many times before.
Some of these objections are:

· There is not enough gold;

· Russia and South Africa, since they are the principal
producers, will benefit;

· Gold is subject to undesirable speculative inf- luences;

· Gold will produce instability in prices.

The first objection, that there is not enough gold, is based upon a
misunderstanding of the price of gold. It assumes that the
present exchange ratio between a weight of gold and notes is
the exchange ratio that must prevail when the gold is made a
medium of exchange. Such obviously is not the case. To put it
simply, lower prices under gold currency will eliminate the
necessity for larger sums. One could buy a suit that costs 400
paper units with 20 gold equivalents at a different exchange
ratio.

The second objection, concerning Russia and South Africa is
equally groundless. It could be considered an advantage, in the
same way oil or a fertile soil could be equally, in comparative
terms. The amount of gold already taken out of the earth in the
last two thousand years is already superior to the known but
unminted reserves of Russia and South Africa. The unminted
reserves of Russia are estimated to be about 250 million ounces
which is less than what the United States already has in minted
reserves. The demand for gold as a medium of exchange will
release the existing hoardings, a process which is already in
vogue in most central banks.

The third objection, that gold is subject to speculative
influence and therefore too unstable to be used as a medium of
exchange, is also false. During the 70's, gold became a major
hedge against inflation. The run-up in gold prices from $35 to
$850 per ounce came as a result of fears about the value of
paper-money and developing international crises. People who
object to gold because it is speculative confuse cause and effect.

The real speculation is provoked by an irredeemable paper-
money system and people who logically want to protect
themselves from it.

The fourth objection says that gold will produce instability in
prices. Comparing prices in gold in the U.S. in 1833 with
1933, just prior to the abandoning of the domestic gold
standard, the index of wholesale commodity prices increased
only 0.9 percent in one hundred years! Since then the index
increased 350% by 1971 when President Nixon, declaring
international bankruptcy, announced that no more gold would
be given in exchange for dollars. In the last twenty years the
index has gone up around 400%.

Gold is therefore stable and fit to be money, and history has
shown us that there is no money more unstable or unfit than
paper-money.

FATWA ON PAPER MONEY

Paper Money is not a legal medium of exchange
If paper money is a debt representing a merchandise (dayn):
The debt must have a definition of what is owed.

But even if it is defined as a proper debt, a debt cannot be used
as a medium of exchange. Concerning paper-money as wealth
entrusted to non-Muslims, this is not allowed.

If paper money is a tangible merchandise ('ayn):

Its value corresponds only to its weight as paper. Equally we
take the value of the dinar by its weight not by its nominal
value.

Either way, paper money cannot be accepted as a medium of
exchange.

An Instrument of tyranny

We have heard economists saying:
"We need a flexible currency"
"We need a currency that can be expanded or contracted
according to the needs of the economy"
"An increase in currency will quicken industry"

These are all fallacies to justifiy the insolvency of the issuers of
the notes in order to avoid their obligations to pay.

There is, in truth, a great charm in the idea of being able to pay
off all our needs, satisfy all the government expenses and to
make the whole communtiy prosperous, just by printing a few
characters on bits of paper. But when a man is capable of
believing that, he will believe anything.

Another fallacy to justify theft is to say:"It is an emergency"
indeed a war can influence anybody to accept what appear to be
solutions. After the emergency comes the semi-emergency of a
crisis, or an almost-emergency time or an almost-normal time.
In every case our individual rights are no longer in our hands.

Any failure to repay in whole or in part what is due by the
promissory note is but a form of theft

THE RING - The trap and decay of the Khalifate

Up until the XV century the Muslims were in total charge of
world trading. From then on the Europeans started to take over
by the power of the ring.

The ring is a simple mathematical equation, which, as mentioned
by Richard Wagner in his famous opera, gives total power to
the person who uses it, although it contains a curse: "Whoever
uses it, will never be loved". Power was not wielded by gold,
but by storing it in a guarded cave. People slaved to mine it, but
were ruled by whoever possessed the ring.

This mathematical formula attached to debt and symbolic money
destroyed the Muslim Khalifate.

This mathematical formula is what banking is all about.

The formula needs a pre-condition: the existence and acceptance
of symbolic money.

Then it consists of lending 'at interest' symbolic money they [the
banks] do not have.

By lending 20 times more than they have, all repayments of 10%
become in accounting like 200% (20x10%).

We pay 10%, but they collect 200%.

But if everyone seems to win, who is the loser?

The losers are all passive holders of the currency who will suffer
the inflation originated by the money created out of nothing.
That is it !

Once the Muslims accepted their symbolic money they
inadvertedly authorised the magical system which gave the
banks a previously undreamed of world dominion.

The ring did not just conquer the states, its power was so
fascinating, that it transformed the states into banks.

And the States became banks

This convenient method of 'coining credit', was soon discovered
by the governments and they issued their own promissory
notes in paymnet of their expenses; a resource the more useful,
because it was the only mode in which they were able to
borrow money without paying interest, their promises to pay
on demand being, in the estimation of the holders, equivalent to
money in hand.

The governments incapable of containing their own expanding
deficits then created the legal money. The law of legal tender
established that all money issued by the issuing authority must
be accepted by force in payment of any debt.

The legal money abolished the contractual law that guaranteed
the freedom of the people to choose and imposed on the citizens
an artificial currency with a legal value established by the
government.

This convenient method of 'coining credit', was soon discovered
by the governments and they issued their own promissory
notes in payment of their expenses; a resource the more useful,
because it was the only mode in which they were able to
borrow money without paying interest

In the beginning there was gold...
then paper was issued as a promise to pay in gold
and finally the issuers broke their promise and transformed paper
into a non-redeemable official note.

We should now reverse the process...
governments should freely convert their currency
and finally eliminate all paper currencies

THE IMPORTANCE OF THE DINAR AND THE DIRHAM

Ibn Khaldun wrote in his book "Al-Muqaddimah":
"The Revelation undertook to mention them and attached many
judgements to them, for example zakat, marriage, and hudud,
etc., therefore within the Revelation they have to have a reality
and specific measure for assessment [of zakat, etc.] upon
which its judgements may be based rather than on the non-
shari'i [other coins]. Know that there is consensus [ijma] since
the beginning of Islam and the age of the Companions and the
Followers that the dirham of the shari'ah is that of which ten
weigh seven mithqals [weight of the dinar] of gold. ... The
weight of a mithqal of gold is seventy-two grains of barley, so
that the dirham which is seven-tenths of it is fifty and two-fifths
grains. All these measurements are firmly established by
consensus."

The primordial uses of the Dinar and the Dirham are:

TO SAVE
Gold or silver are the most stable currency the world has ever
seen

From the beginning of Islam until today, the value of the Islamic
bimetallic currency has remained surprinsingly stable in relation
to basic consumable goods:

A chicken at the time of the Prophet, sallallahu alaihi wa
sallam, cost one dirham; today, 1,400 years later, a chicken
costs approximately one dirham.

In 1,400 years inflation is zero.

Could we say the same about the dollar or any other paper
currency in the last 25 years?

In the long term the bimetallic currency has proved to be the
most stable currency the world has ever seen. It has survived,
despite all the attempts by governments to transform it into a
symbolic currency by imposing a nominal value different from
its weight.

Reliability.

Gold cannot be inflated by printing more of it; it cannot be
devalued by government decree, and unlike paper currency it is
an asset which does not depend upon anybody's promise to
pay.

Portability and anonymity of gold are both important, but the
most significant fact is that gold is an asset that is no-one else´s
liability.

All forms of paper assets: bonds, shares, and even bank
deposits, are promises to repay money borrowed. Their value
is dependant upon the investor's belief that the promise will be
fulfilled. As junk bonds and the Mexican peso have illustrated,
a questionable promise soon loses value.

Gold is not like this. A piece of gold is independent of the
financial system, and its worth is underwritten by 5,000 years
of human experience.

TO PAY ZAKAT
Zakat cannot be paid with a promise of payment

Zakat can only be paid with tangible merchandise, called in
Arabic 'ain. It cannot be paid with a promise to pay or a debt,
called in Arabic dayn.

From the begining the zakat was paid with dinars and
dirhams. Most significant is that the payment of zakat was
never allowed in paper money during all the ottoman period
right until the fall of the Khalifate.

Shaykh Muhammad Illish (1802-1881), the great maliki cadi,
said that if you were to pay zakat with paper-money only its
value as merchandise (dayn), that is, its value as paper can be
accepted. Therefore, its nominal value is irrelevant as payment
of zakat.

Shaykh Illish wrote:
"If the Zakat was obligatory by considering its substance as a
merchandise, then the nisab would not be stipulated according
to its value but according to its substance and its quantity, as is
the case with silver, gold, grain or fruits. Since its substance
[paper] is irrelevant [in value] in respect to the Zakat, then it
should be treated as the copper, iron or other similar
substances.'

Zakat cannot be paid in paper money (American dollars for
example). This is a serious innovation (bid'ah) in one of the
five pillars the deen of Islam.

For those not familiar with the fiqh on zakat I will quote from
the Se'adet-i Ebediyye or "Endless Bliss" written by Husain
Hilmi Effendi (the founder of Ihlas Foundation) in 1956. It is


not a book of the maliki fiqh [which we use], but it is a book
supported by the people who use the name "Ahl al-Sunnah"
and it can enlighten the understanding of our "de facto" 'alims.
For those who do not know about this book, this is preface
note of the book itself: "Se'adet-i Ebediyye is a book prepared
according to the Hanafi madhhab. There is not any knowledge
or word, which contradicts the creed of "Ahl-i Sunnat and
Jama'at in this book." Here are the relevant quotes:

"the zakat of paper money is to be given in gold. It cannot be
given in paper money"

"It is haram to accept any money which is not gold or silver as
zakat or kharaj [from Harun Rashid]"

"Ignorant people say, "Paper money cannot be compared to
bonds [which are not acceptable as payment of zakat] written
out between two people. It is day's currency. It has become
attested universally. It is indispensable to give it today." They
should not be believed. Something cannot be universal,
indispensable or permissible by the word of us the populace."

"In none of the books written or the fatwas given during that
long period [the Ottoman Empire] has it been said or stated that
the zakat could be given in paper money."

The return to the payment of zakat in gold and silver is an
essential part of the re-establishment of Islam.

We must be particularly aware of those who say 'it is not
practical to pay zakat in gold and silver'. This is a false
argument, not the issue. The issue is the fulfilment of the Allah's
Law. We must work towards the establishment of the Law. The
return of the gold Dinar, like the return of the Khalifate, may or
may not appear to be practical yet no Muslim can deny that these
are our obligation.

TO BUY AND SELL

The Dinar and the Dirham are the currency of the Islamic
UmmahNo more hundreds of different paper currencies
diseased with inflation.

A piece of gold is equaly valid wherever you are in the world.

In the past, Muslims were able to travel throughout the Islamic
world and trade with dinars, as theycould at home. From the
XV century onwards the Europeans started to introduce the
banking promisory note in Muslim lands. Paper money gave
European traders an incredible purchasing power that
overwhelmed and eventually surpassed the Muslims'
superiority in world trading.

Gold was money well into this century, and for at least two
centuries before, most bonds, including govern-mental ones,
were gold bonds. But after the First World War, since the
financial demands of the war led governments to print paper
money in excess, the convertability to gold was first suspended
for the most part, and finally terminated.

How important is the dinar and the dirham to the deen of
Islam?

Al-Qurtubi (d. 1273), one of the greatest commentators of
Qur'an, wrote in his renowned Tafsir about the following ayat
of Qur'an,
."O you who believe! Obey Allah and obey the Messenger and
those in command among you. ..."
Qur'an, 4, 59

that the ayat is an order to "obey the Sultan with respect to
seven things: the minting of the dinar and the dirham, fixing
weights and measures, legal judgements, Hajj, Jumu'ah, the
two Eids and Jihad."

The minting of the dinar and the dirham is therefore the first
obligation of the Sultan to be commanded and to be followed

WHAT IS THE ISLAMIC DINAR AND DIRHAM?

According to Islamic Law...
The Islamic Dinar is a specific weight of gold equivalent to 4.3
grammes.
The Islamic Dirham is a specific weight of silver equivalent to
3.0 grammes.

Umar Ibn al-Khattab established the known standard relationship
between them based on their weights: "7 dinars must be
equivalent to 10 dirhams.

"How can I use them?
1.- I can save them because they are wealth in themselves.
2.- I can pay zakat and dowry as they are requisite within Islamic
Law.
3.- I can buy and sell with them since they are a legitimate
medium of exchange.

THE QUESTION OF PAPER MONEY

Allah says in the Qur'an:
"And amongst the People of the Book there are those who, if
you were to entrust them with a treasure (qintar), he would
return it to you. And amongst them is he who, if you were to
entrust him with a dinar would not return it to you, unless you
kept standing over him.
Qur'an (3,75)

Qadi Abu Bakr Ibn al-Arabi, the greatest authority on Qur'anic
Law wrote in his famous "Ahkam al-Qur'an" about this ayat:
"The benefit that can be taken from this is the prohibition of
entrusting the People of the Book with
goods".

Qadi Abu Bakr said: "The question concerning entrusting
property is legislated by the text of Qur'an." This means that
the ayat is a legal judgement of absolute validity and of the
greatest importance to the deen.

Entrusting wealth to non-Muslims is not allowed, but
furthermore, taking a non-Muslim as a partner outside Dar al-
Islam (where we stand over them) is extremely restricted,
because they might cheat or might use our wealth in forbidden
transactions. Since paper-money is a promise of payment, can
it be permitted to trust the issuers while they hold the payment
(our property) outside our jurisdiction? History has also
demonstrated repeatedly that paper money has been a
permanent instrument of default and cheating the Muslims.

In addition, Islamic Law does not permit the use of a promise
of payment as a medium of exchange.

THE HISTORY OF THE ISLAMIC DINAR AND DIRHAM

In the beginning the Muslims used gold and silver by weight and
the dinar and dirhams that they used were made by the
Persians. The first dated coins that can be assigned to the
Muslims are copies of silver dirhams of the Sasanian Yezdigird
III, struck during the Khalifate of Uthman, radiallahu anhu.
These coins differ from the original ones in that an Arabic
inscription is found in the obverse margins, normally reading
"in the Name of Allah". Since then the writing in Arabic of the
Name of Allah and parts of Qur'an on the coins became a
custom in all mintings made by Muslims.

Under what was known as the coin standard of the Khalif Umar
Ibn al-Khattab, the weight of 10 dirhams was equivalent to 7
dinars (mithqals)

In the year 75 (695 CE) the Khalif Abdalmalik ordered Al-
Haddjadj to mint the first dirhams, thus he established officially
the standard of Umar Ibn al-Khattab.

In the next year he ordered the dirhams to be minted in all the
regions of the Dar-al-Islam. He ordered that the coins be
stamped with the sentence: "Allah is Unique, Allah is Eternal".

He ordered the removal of human figures and animals from the
coins and that they be replaced with letters. Gold and silver
coins remained official currency until the fall of the Khalifate.
Since then, dozens of different paper currencies were made in
each of the new post-colonial national states created from the
dismemberment of Dar al-Islam. This command was then
carried on throughout all the history of Islam. The dinar and the
dirham were both round, and the writing was stamped in
concentric circles. Typically on one side it was written the
"tahlil" and the "tahmid", that is, "la ilaha illah Allah" and
"alhamdulillah"; and on the other side was written the name of
the Amir and the date. Later on it became common to introduce
the blessings on the Prophet, salallahu alayhi wa salem, and
sometimes, ayats of the Qur'an.

THE ISLAMIC DINAR. Introduction.

I would like to introduce you to some general ideas and
guidelines to the very important issue concerning all the
Muslims today, which is the abandonment of Riba.

Allah, subhana wa ta'ala, says in Qur'an: "wa hallal allahul
bai'a wa harramul riba"; which means: "Allah has permitted
trade and forbidden usury (Riba)". Also Allah says in the
Qur'an: "ia yuha alladhina 'amanu uttaqu Allaha wa dharu ma
baqiya mina riba, ina kubtum muminin. Fain lam taf'alum,
fadhadhu biharbin mina Allahi wa Rasulih", which means, "O
you who believe! Fear Allah and give up what remains of your
demand for usury, if you are indeed believers. If you do not,
take notice of war from Allah and His Messenger".

The issue of the dinar relates to the prohibition of Riba, the
chronic economic paralysis of Muslim countries, to the
destruction of the Khalifate, the unity of the Ummah under one
currency and what is most important the restoration of the
fundamental pillar of zakat. This is to say, the issues that matter
to the people who want to see a Dar al-Islam and the Khalifate
restored again, and among this people the sufies, who care
nothing except Allah, are in the first line.

The magnitude and the importance of this issue comes before
other, often over-stretched, minor matters. If a tiger is about to
devour you, you do not entertain yourself with a mosquito.

The enemies of the Islamic Dinar are the enemies of the
Sunnah of Rasul, salallahu alaihy wa salaam. They have to
denounce the practice of the Sahaba and the practice of the
Ummah for all the centuries since the beginning until the fall of
the Khalifate. They have tried in the past to convince all of us
that the Banks were halal (like Muhammad Abdou and his
followers did). Then they came with the Islamic Bank, which is
like Islamic whisky. But as the fallacy of Islamic Banking, was
openly revealed (by the Sufies) and as their practices have
became known as fraudulent and usurious (in Islamic Law)
despite their deceitful use of Islamic terminology (such as
qirad, shirkat, kira, etc.), they have tried to content everybody
with the cynical idea of "being practical in a sinful world".
They have justified the use of paper money, even in Muslim
countries, with false doctrines and meditated silence. While the
Muslims all over the world are still today being cheated and
robbed by a monetary system totally unjust, deceitful and
contrary to Islamic practices, based banking paper-money, a
methodical cover of puritanical and esoteric doctrines borrowed
from decaying Christianity and a noisy silence over the
important issues was spread with scientific precision,
sometimes using false 'alims and false sufies, to keep the
Muslims busy by a self-inflicted sense of guilt (a doctrine of
'your iman is not good enough') and trivial matters of no
importance, or its opposite reaction, a fanatical radicalism
deprived of real aims.

Apart from the very ignorant who still believe that Islamic
Banking is Islamic or believe that paper money is modern and
wonderful to people, is there any justification to remain
passive, silent in a kind of dispassionate helplessness, on this
well known subject? The answer must be an emphatic NO. We
cannot let the helplessness of few lifeless people contaminate
our spirit. We should not accept those who say: "I believe in it,
but it cannot be done or it cannot be done today. We are waiting
[for a signal]". They are ignorant about the nature of the deen.
Leave these people alone. Keep the company of the Sufies that
are going ahead. This are people whose carelessness about the
world let them see through. And where other are suspended in
sea of impossibilities and doubts, the Sufies will show you the
easy way to victory. As sufies, we undertake the obligations of
all the Muslims in our hearts and deal with them as if they were
ours. We cannot be bother with our ego. That is why we
simply forget it.

Sufies believe, out of their taqwa, that we are responsible for
everything without excuse. Yet, they know that they are
incapable for such task, out of their own dependence of Him.
But they know and act accordingly, that Allah is capable. And
by His Power, out of their hope in Him, they can achieve their
obligations and show others how to do it.

We will fulfil our duties by the authority of Allah, subhana wa
ta'ala. We do not fear the state, or the banking system, or
anything else. We, only fear Allah. Our path is a path of
showing easiness towards Allah; of showing the Muslims that
by Allah, and by our obedience to Him, that is what we call by
"giving up", we become in charge of our affairs. I recall the
title of the book of the great wali of Allah and Shaykh of our
tariqa Shaykh Ahmad Ibn Ataillah, may Allah be pleased with
him, "The Book of illumination on the Giving Up of the
Management of Affairs". The title is enough. It also reminds
me of what Allah says in the Qur'an in Surat al-Layla:

"fa amma man a'ata wa attaqa wa saddaqa bil husna,
fasanuiassiruhu lil iusra
wa amma man bakhila wa astaghna wa kadhdhaba bil husna,
fasanuiassiruhu lil 'usra".

which means,

"if you give sadaqa and fear Allah and you believe in the
Goodness [of Allah], we will facilitate your way to easiness.
But if you are mean and [you think] you are self-sufficient [from
Allah] and you do not believe in the Goodness [of Allah], we
will facilitate your way to difficulty.

The path of tasawwuf is a path of easiness. This is opposite of
the people whose path and teaching are full of doubts, hidden
meanings, waiting for the Mahdi and unknown mysteries. Our
path is certainty and increase of certainty.

We firmly believe "la hawla wa la quwatta illah billah". There
is no two powers, but only The One. Kufr and the kaffirs have
no power. Their illusion of power depends on us, the Muslims,
in as much as we are not fulfilling our duties. The power of
Muslims is borrowed from Allah, by His Will, as we obey and
submit to Him. Kaffirs are to us, just like flies are to people.
They are there to keep us clean. But if we are dirty they become
a bother to us. So the issue is really in our hands without
excuse.

You should nevertheless, be aware that there are non-Muslim
and some Muslims that when they hear that the [other] Muslims
are introducing the Islamic dinar as their medium of exchange,
they will twist in themselves in real agony, as they rightly fear
that their petty worries and trivial fantasies are being blown
apart by the real imperatives and force of a Resurgent Islam.
But don't worry, it will be very easy to identify them, because
their agony will show in their passivity and lack of interest for
what is happening. This is because, as Shaykh Darqawi, may
Allah be pleased with him, told us, they are dead.

The present Prime Minister of Turkey, may Allah bless all the
Turkish people and through their resurgence give us a Khalifa,
His Excellency Dr. Necmettin Erbakan has brought the matter
of the Islamic Dinar to the frontline of the Islamic discourse to a
point of no-return. He has pledged the will and commitment of
the Muslims of Turkey to the establishment of the Islamic Dinar
as the currency of an Economic Union of Muslim Countries.
He astonished many people, who had looked with contempt
and dismissive condescending what the sufies have been saying
and struggling for for a long time. Many, who had pledged
themselves to the folly of Islamic Banking and the nonsense of
what they call Islamic Economics, have, with their paralysed
silence, shown us that they do not know how to react to it.
They are now out of touch with the dynamic and powerful
Raising of Islam which they seem to be unable to see or taste.
They now only see themselves in front of the abyss of wasted
good will in prosaic phobias and irrelevant matters, they created
for their gullible followers. Although some will prefer not to
look IF they can get away with it.

I am proud to say that the dinar that Dr. Erbakan hold in his
hand when he first publicly pronounced his intentions in the
Blue Mosque of Istanbul, surrounded by the takbirs of our
excited and committed Turkish brothers, was a dinar struck
under the authority of the Amir of the Spanish Community, he
himself a long-time devoted Sufi of the Shadili-Darqawi-
Murabitun tariqah, in the city of Granada, may Allah reward
him by His Generosity for doing that.

I, like all the people present, will remember forever the
moment when His Excellency Dr. Necmettin Erbakan and my
Master, Shaykh Abdalqadir as-Sufi al-Murabit, together by the
hand, proclaim from the podium, to the cheerful people of
Istanbul and the shocked Turkish media, in the Opening
Ceremony of the I International Conference of Islamic Thinking
in Istanbul on May of last year, that the dinar was the currency
of the Muslims.

By the Mercy of Allah, all the sufies stand together in this
point of the introduction of the Dinar. I recall the words of the
wali of Allah and the Light of Fatih in Istanbul, Shaykh
Mahmud Effendi, who, surrounded by his murids and others,
as my Master Shaykh Abdalqadir As-Sufi showed him the
dinar and the dirham that our community in Germany was
putting in circulation, said: "This is the money of the Muslims.
It is very important. We should do it very quickly".

Let all the sufies, of all the tariqahs, united by the love on the
Rasul, salallahu alaihi wa salaam, let us be ahead and take upon
ourselves to be the beginners of the introduction of the dinar
and the dirham, only for the pleasing of Allah, subhana wa
ta'ala, by the fulfilment His Command, and so that everybody
else can follow.

The following simple introduction presented in parts will be
followed by deeper analysis and guidelines for the
abandonment of Riba and the establishment of complete and
self-transformative Islamic Trading. There will be also practical
guidelines of how you can obtain the coins and how you can
start using them.

HOW SUBSTANTIAL IS THIS MOVEMENT ?

At this stage, the movement to convert from paper money to real money in the Muslim world is small, but if information I have is accurate, it could be about to explode in size driven by the reasons noted above. Here are some of the recent developments which suggest the movement may be well on its way to becoming a monetary force to be reckoned with.

· The State Government of Kelantan, the northeast Sultanate of Malaysia has a week ago officially adopted the ISLAMIC DINAR its economic policy. This means that the ISLAMIC DINAR will circulate through the hands of hundreds of thousands of people in a physical form. It seems possible that as word of this movement travels among Muslims, demand to open accounts and begin using this medium of exchange could grow very rapidly in the Muslim world.

· The ISLAMIC DINAR is now being privately used in more than 22 countries and is currently being minted in four countries. Eventually, the list of countries where it is traded is likely to grow to a much larger number given the large number of Islamic Countries who are members in the Islamic Development Bank, which includes some 51 countries. During 1982, the Islamic Development Bank was prescribed by the IMF as a holder of Special Drawing Rights (SDR's). SDR's are a unit of IMF currency tied to gold. The Islamic Dinar. The Islamic Dinar, which is the unit of account at the Islamic Development Bank, is equal in value to one SDR. Member countries of the Islamic Development Bank are Afghanistan, Albania, Algeria, Azerbaijan, Bahrain, Bangladesh, Benin, Brunei Darussalam, Burkina Faso, Cameroon, Chad, Comoros, Djibouti, Egypt, Gabon, Gambia, Guinea, Guinea-Bissau, Indonesia, Iran, Iraq, Jordan, Kazakhstan, Kuwait, Kyrgyz Republic, Lebanon, Libya, Malaysia, Maldives, Mali, Mauritania, Morocco, Mozambique, Niger, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Senegal, Sierra Leonne, Somalia, Sudan, Syria, Tajikistan, Tunisia, Turkey, Turkmenistan, Uganda, United Arab Emirates and Yemen. With a total Muslim population of 1.1 billion (19.2% of the world's population), if even a small percentage of Muslims begin to demand Islamic Dianars as their medium of exchange instead of paper, it could have a dramatic effect on the price of gold.

· An Islamic Agency has been set up to handle accounts and payments between accounts in the city of Dubai. This will allow the use of Islamic Dinars to spread in the Muslim world as a medium of exchange. At present, this undertaking is quite modest, with only $200,000 worth of gold deposited in Dubai. Dubai is viewed as an attractive place to keep money away from the taxation authorities since there are not taxes on individuals, corporation or merchandise sales there. This spokesman for the Islamic Dinar mint also claims his organization has a good relationship with the Royal Family in Dubai, which should help the group's efforts. After the summer a campaign aimed to the Muslim world to open accounts in dinars is anticipated and the goal is to open 10,000 accounts within the first year of operation.

· The organization may link up with another new and exciting development in the modern world as far as gold is concerned. They may soon be trading gold Islamic Dinars globally on the Internet through an organization located at www.e-gold.com . Readers are encouraged to visit this web site for more information, but essentially, the technology now exists to enable you to buy and sell gold right from your computer. It will be quite easy to make compatible our Islamic Agency, which will be operated by a Web Site to your e-gold Web Site.

· The sponsors of the Islamic Dinar will suggest to Muslims that they convert their paper currency denominated accounts into Islamic Dinar in Dubai. In addition to tax aspects, Dubai is an appropriate place from which to launch this new banking enterprise because it is forbidden for Muslims to deposit their money with non-Muslims. In the Qur'an itself, Allah makes this prohibition (which is a command for us) clear precisely when referring to the Islamic Dinar.

· On May 22 through May 24, directors of the Islamic Mint Directors from all over the world were scheduled to meet in Dubai to move this project forward. Stay tuned. I plan to tell you more about this story as it unfolds and how you may be able to begin buying gold by way of e-gold.

At this juncture, the western world could care less about gold because it has convinced itself that man can control his own destiny. Life has been so grand for us in the U.S. and most of the western world over the past 50+ years that we have given ourselves the credit for our prosperity rather than giving God the credit. Given this delusional thinking, we are convinced there is nothing, including matters of money that we cannot fix. This of course is pure rubbish especially when you consider that the depression now faced by Asia was created by excessive international liquidity made possible by the post-Bretton Woods floating rate exchange system. Even as the west experiences a moral decline that will inevitably lead to its destruction, Muslims acknowledge man's true need to live by a higher order. Accordingly, they detonate bombs and build their economies on real money rather than IOU's. Timing is difficult to figure here, but 1 billion+ Muslims beginning to opt for real money rather than the fake stuff, could portend well for the price of gold in the near future.

Enormous Carnage to Asian Muslims

One of the reasons given for the continued insane rise in Wall Street has been the flow of money out of the Asian countries into the U.S. markets in search of a safe haven. But this makes no sense to the tens of millions of Muslims in Indonesia who are now suffering through a fate worse than we faced in the 1930's. Indonesia, which is comprised virtually 100% of Muslims, contains the 4th largest population in the world. Those people blame Suharto but they also blame the U.S. because Suharto was financially tied into the U.S. and our internationally dominant fractional reserve banking system. This underlying anger, which has been caused by enormous devastation suffered by hundreds of millions of Muslims throughout Asia, is likely to provide a powerful incentive for Muslims to "stick it to the Great Satan" by selling dollars and buying Islamic Dinars. At the same time, these people see this as a way to protect themselves by holding real money rather than the fake paper IOU's which has, overnight lost up to 70% of its purchasing power overnight. The dominant theme of the sponsors of the Islamic Dinar is the liability aspects of paper money and that as a result it is dishonest money. Moreover, as recently seen in Asia, when the promise to pay fails dollars fails the system collapses and human misery is compounded. This may be little more than theory to most of us in the U.S., but it is a harsh reality for hundreds of millions of Muslims who live in Indonesia and elsewhere in Asia. It may be safe to say these people are mad as hell and they may not take it much longer.

· Islamic Religious Beliefs - Not unlike Christians who have forgotten the basics of their faith founded on biblical teachings, so too have many, if not most Muslims forgotten the basics of their faith based on the Qur'an. One of the main pillars of the Islamic faith is the observance of Zakat, which dictates that Muslims must give at least 2 ½ % of their income to the poor. Wealthy people are encouraged to give more. The important factor to keep in mind as far as gold is concerned is that these gifts are to be paid only with tangible merchandise and that it cannot be paid with a promise to pay, which is in fact, all that paper money is. The Zakat is to be paid with honest money or actual substance, not a promise to pay. The Islamic Dinar, which is A 100% gold coin and unit of currency, fits this Islamic requirement.

The Islamic (Gold) Dinar

Pakistan, a Muslim country, recently exploded an atomic bomb following the same action by its Hindu neighbor, India. These bombs everyone has heard about and the potential for these and other countries end the existence of mankind on earth certainly is frightening to everyone except perhaps stock market crazed westerners who are simply not sober enough to care. Frightening as the atomic bomb is, another kind of bomb, namely The Islamic Dinar could pose an even bigger threat to our existing financial system which I believe would be enormously bullish for gold. Although I believe the Islamic Bomb may be a threat to the status quo, almost no one has yet caught on to this very recent development.

The Islamic Dinar is a newly created 100% gold currency that its backers hope and believe will become the currency of more than one billion Muslims. The organizers of this currency not only see the Islamic Dinar as an eventual rival to the U.S. Dollar as a reserve currency, and are hopeful it will usher in the demise of the U.S. Dollar. So far, I have learned most of what I know about this movement from the Internet. The Internet is very often used to spread misinformation as well as truth. So, it may be possible that this movement is not all that it is cracked up to be on its web site (www.users.dircon.co.uk/~netking/murabitn.htm). However, I believe the movement is real and for reasons noted below, I think it could indeed pose a threat of devastation to the U.S. Dollar and existing world order. Following are a couple of the reasons I think this could be true

Final Remarks

The concept of Islamic Dinar is not new and was in use long before the paper currency came into existence. The inherent flaws in the paper currency make it unsuitable for the use as a medium of exchange and hence needs to be rejected.

A viable alternative would be to revert to the gold standard and use gold coin that we can name the “Islamic Dinar”. There are numerous benefits associated with the usage of this mode of currency if implemented successfully. Those of importance for the Muslim world are the factors that it will help the Muslim countries unite; make them stronger financially and also aid in increase trade between them. The Muslim countries will have to join hands in this effort to create the Islamic Dinar which will not only provide the world with economic stability but will also be responsible for bringing the Muslim world closer together. Although, Malaysia together with few other Muslim Nations struggle hard to make the dream comes true, but may not be accurately possible unless all Muslim nations are united to achieve the goal and hence, the unity among Muslim countries is essential or rather the foundation for success.

Significance of the Islamic Dinar

A number of advantages are to be gained if the Islamic countries finally decide to unite and create a single currency. These significances are itemized as follows:

• The Muslim countries will be using a currency that will be acceptable to all. The countries dealing with the Muslim countries will know that the gold in itself has value and will not worry about its depreciation or vice versa. This will result in a lot of trade among the Islamic countries and also the rest of the world.

• It will encourage trade and commerce among the Muslim nations. Even though there are many Muslim nations in the world, who have a very low level of trade and commerce exist among them. A single currency will make it easier for the Muslim countries to trade with one another and thus bring them closer in line with the broad principles of Ukhwah (brotherhood).

• By fostering closer ties among the Muslim nations and also better trade relations, the Muslim countries will no longer be as dependant on other non-Muslim countries as they currently are.

• Presently, some Arab countries sell oil in US Dollars as they feel secure knowing that it will not lose as much through depreciation than other countries. These countries can then revert to the Islamic Dinar and ask for payments in that currency. At one hand, they will benefit because, there is a very low chance that the gold coin will lose value. On the other hand, it will help the Muslim countries as a whole by ensuring that the rest of the world will use their currency. Hence, the Islamic Dinar will make the Muslim countries financially stronger and will alleviate their current plight.


It can also be ascertained from history that the gold coin was used during the reign of the second caliph ‘Umar Ibn al-Khattab® . At that time, the Dinar and Dirham went hand in hand whereby Dinar was a relatively stronger currency as compared to Dirham. This was solely due to the quantity of gold that the coin contained. What this meant was that, since 7 Dinars contained the same amount of gold as 10 Dirhams. Therefore, they had a ratio of 7 to 10. A person willing to buy 10 Dirhams must pay 7 Dinars for it and vice versa. Thus, the concept of using gold coin or the Islamic Dinar is not new to the Muslim world. Therefore, to submit that, the gold coin system worked very well for them so there is no reason to contend that it should not work well for us too.

Islamic Dinar vs. Euro

It might seem that the effort of the Muslim countries to create an Islamic Dinar is similar to the efforts of the European Union to adopt the Euro. This statement however, is far from the truth.

The European Union’s job was a lot easier than that of the Muslim countries due to a number of factors that need to be explained for better understanding of the whole scenario.

• The European countries already had a strong representative organization by the name of the European Union, which is respected by all. The Muslims also have the OIC (Organization of Islamic Conference), which perhaps does not have enough authority or power to make important decision. This is very unfortunate as Islam is the second largest religion on earth and a large number of nations are Muslims whereas the organization that represents them is weak one and can barely fight for their cause. This means that the Muslims will have to make OIC stronger so as to empower it to make such an important strategic decision. For this, they will have to first unite themselves and ensure that they will support any decision made by OIC either financially or in any other way possible. This should then enable OIC to unite the Muslim nations into accepting the need for a single currency that will be used by them all.

• Another factor that differentiates the Muslim nations from their European counterparts is that, the European nations have more unity than the Muslim nations. They all trust and respect each other, in other words, the European Union is like an umbrella that further brings them together.

The European countries know and understand that they will become prosperous and successful only if they cooperate with one another. Their strength lies in their ability to unite for the same cause and this is exactly the strategy that they have adopted. The Muslims on the other hand, unfortunately lack the unity that would put them in a position to join hands together and make such an important decision. One reason for the lack of unity is that, Muslim countries are too busy solving their internal problems to pay attention to other problems. This fact can be clearly stated by the war in Palestine that has directly or indirectly affected Muslim countries around the globe. Then there is the fight in Bosnia and Kashmir whereas Somalia is busy in its battle with famine, hunger and starvation. Moreover, some Muslim countries are having conflicts with one another, which makes this goal of Islamic Dinar even more difficult. How can a unanimous goal be achieved if opposing parties are present at the table? The European countries were fortunate that they did not have to face many of these problems but that does not mean that they did not face any problems at all.

• A major problem that they faced was the level of interest in the Euro was different for every country. Some countries were very enthusiastic as they had much to gain whereas others where lukewarm since the transition from a national currency to the Euro would not do much for their country’s economy. In fact, some of the countries might even be affected adversely. To solve this problem, the European countries decided to create a fund whereby the countries that would suffer from the Euro could be financially assisted. This would remove their fears of economic suffering and they too will be able to have at least some benefits from the Euro. The Muslim countries are also faced with the same dilemma and will have to decide their approach.

• Another problem for the Muslim countries is that, each country has its own distinct culture even though the religion is the same. Some countries might look upon this single currency as a step away from their tradition and will end up opposing the whole plan. The European countries did not have to overcome this obstacle as the culture and tradition of the European countries is almost the same with very minor differences.

• The value of the currencies in the Islamic world varies tremendously, for example the currency of Malaysia is much stronger than that of Pakistan and Bangladesh. The US Dollar is equivalent to 3.8 Ringgits whereas the value of the Bangladeshi Taka and the Pakistani Rupee is much lower. The question here is that, at what value should the Islamic Dinar settle itself ? The Malaysian government might not be willing to accept a currency that is lower in value than their own whereas Pakistan and Bangladesh will not go for a higher currency as it will affect their economic performance.

Islamic Dinar: A Shari’ah Justified Model of Currency

Reversing to the gold standard is not possible if a country alone decides to adopt it unless a unanimous step of the Muslim world is taken positively. The first problem it would face is that of whether other countries will be willing to pay in gold coins or not. After all, it would definitely need the support of fellow countries to introduce the gold money as currency and also to economically survive while using it.

For this reason it is important that a number of countries join hands together to make a joint effort towards establishing the gold standard. These countries will then trade with one another using gold coins thus creating enough market for them to encourage the other countries that are hesitant to use them. These countries will then feel more comfortable with their usage and may even adopt it themselves if it is successful.

So far, only the Muslim countries begin to think of adopting this approach seriously. The first and foremost requirement of adopting the gold standard would be for the Muslim countries to unite. They will all have to sit together on a platform and discuss the method that is viable for them under the circumstances.

Advantages of the Gold Standard: A Shari’ah Perspective

Most Islamic scholars asserted that, the usage of fiat money as a medium of exchange should be replaced by another medium that would be fair and just; preferably gold. One advantage would be that the government will not be able to exercise total control over it as is the case of paper money. The government will no longer be able to issue more gold than is available as was the case with the paper currency where the government can print as much currency as it wishes. After all, how much will it cost to print a piece of paper? The value of gold will only change when a new gold mine is found but that too will not be a severe change. Moreover; the value of gold will eventually stabilize after a period of time.

A second advantage of gold is that, there will be no Riba al- Fadhuly (interest with extra commodity) as the government will no longer be able to fully influence the circulation of gold or its creation. However, the chance of exploitation will still occur because the gold coin may be debased. Debasement of a gold coin would mean that, it will have less gold in it than is stated on the coin.

This form of exploitation was quite common during the days when the gold coin was in use. The prince or king of a place would reduce the amount of gold in the coin and cheat his people. He would then keep the extra amount in the royal treasury for his own personal use and comfort. Hence; if a coin stated that, it was a 1.00 ounce coin, in reality it may have contained about 0.8 of an ounce.

This issue must be resolved before we decide to use the gold Dinar again as it is not much different from the exploitation that one suffers at the hands of paper money. Moreover; the whole purpose of Dinar or gold coin would then be destroyed.

A solution to this could be an auditing body that would inspect the gold coins to check whether they have the stated amount of gold in them or not. This is just like the quality control department in some firms, which check whether the quality of their goods is up to the standard or not.

Problems of the Paper Money in the Socio-Economic Reality and the Shari’ah Response

• The introduction of paper money has led to the problem of instability of currency that did not exist with the usage of the gold standard. The production of gold was quite stable and it then automatically guaranteed stability.

• Paper money unfortunately can be created anytime based on the decision of the government. This is what makes it so unstable unreliable as a medium of exchange. With an ounce of gold could buy the same amount of goods over an extended period of time whereas with a twenty dollar note may not be able to enjoy the same privilege.

• The government decides the money matters of a country and is also responsible for increasing or decreasing the value of its currency. For example, a country may require more money to finance all of its programs. On the other hand, the country might be spiraling into a depression which will result in reduced public spending

Fiat Money

Over time people realized that, carrying gold with them was not a safe practice, in fact it was also not a convenient one either. They then kept their gold and silver with a goldsmith’s place where they paid a small amount of money for the service. The people running the place would then give them a receipt certifying that they indeed had kept the gold away in a locker.

This new invention helped both the buyers and sellers; the sellers knew that the buyers really did have the gold available to pay for the transaction and the sellers found it more safe and convenient to hand over the receipt than to carry the money physically. The seller could then go to the “bank” or “place” where the gold was kept and get it back in return for the receipt.Thus, the receipt or money was then totally backed by gold and the person owning a receipt could go to the bank and retrieve the gold anytime.

During the beginning of our modern day banking system, money was considered a receipt by the government declaring that the person had that amount of gold. A person could always hand over his paper money to another for exchange of a service or commodity thus declaring that the other person was now the owner of the receipt and gold.

The seller of the service or commodity could then go to any bank and claim his gold by handing over the receipt. The method was essentially the same as in earlier times although slightly modernized. Gold was even then the main currency for trade and commerce. This system was known as a fully backed system as the banks had the same amount of gold as they handed over the receipts and is known as 100% reserve banking systems and differs from the one used today. Thus, they would have no problem if all of their customers decided to reclaim their gold on the same day.

The methodology adopted by most of the countries before the world war 1 was based on supplying money to the public that was only partially backed. The banks had the authority to handout receipts to their clients for money that in reality did not even exist. For example, a farmer comes to the bank asking for a loan so as to buy a certain piece of land. The bank would give the farmer a receipt (paper money) upon accepting his request. The bank has thus given out a receipt even though there is not gold backing that receipt. This method is commonly known as the fractional reserve banking system. Here, the bank decides to hand out receipts for gold that doesn’t exist!

Thus, the money is no longer completely backed and the bank has created more money than really exists. Usually, the government sets the reserve requirement which means that the government will decide the exact amount of money that is to be backed. For example, if the government states that a bank must have 20% of the total money in reserve, then the bank will have to retain RM 20,000 in gold if the total outstanding currency of the bank is RM 100,000.

If the reserve requirement set by the government is low, then the bank can lend out more receipts and hence distribute more money into the economy. However, the bank will have to limit its loans if the reserve requirement set by the government is high.

Eventually, the gold backing of money was totally abolished in August 15, 1971 when President Nixon suspended the gold payments. Thus, the money that we have today is fiat money, which is not backed by gold. We no longer use paper money that is really a receipt for gold but instead the fiat money has taken over as the medium of exchange.

Some countries have devised a solution to stabilize their currency whereby they peg their currency to that of the United States. This is done based on the preconceived notion that the U.S currency is comparatively the most stable currency available. This is the case in Malaysia as its government has declared that 1 U.S Dollar is now the equivalent to 3.8 Malaysian Ringgits. Any inflation or deflation on the part of the dollar will definitely have a profound effect on the Malaysian currency.

Gold Standard

However, it was the use of gold coins that was the rage in the era before the paper money was introduced. Gold and silver coins were preferred as they had value in themselves and were relatively stable. A person could be almost certain that he would be able to buy the same basket of goods with a gold coin even after a certain period of time, say two months.

The need for silver coins arose from the fact that a person could not buy everything with gold coins as some articles were too cheap to be replaced by gold. For example, a person wishing to buy ink for his pen might think that a gold coin was too much to pay for it and would thus pay in silver instead. This usage of gold and silver coins as money is termed as “bimetallism” and was commonly practiced.

The gold standard was quite stable and was highly regarded throughout the world. It paved the way for international trade as people around the globe have a mutual desire for gold. Moreover, the traders could melt the gold coin and sell it for its gold content if the need ever arose.

Countries knew the value of their money by comparing it to gold. For example, if the U.S Dollar was worth an ounce of gold and the British Pound was worth half ounce; then the British would have to pay Twenty Pounds for an item that was worth $10 in the U.S. Thus, the departure from the gold standard created a dilemma as foreign countries now no longer knew the real value of their money and whether they were being cheated in trade by another country or not.

Possible Practices of Currencies: A diversified phenomena

Money

Money in any form must have three attributes that make it acceptable to the public.

i. It must be able to be stored money. For example, a person receives his salary at the beginning of the month, but he may not be willing to spend it that very moment. He may decide to keep the money and use it now and then throughout the month. Or he may be saving that money to buy a house or a farm for and will have to save money for months ahead.

ii. It must be a unit of account. The users must be able to measure the value of different commodities with respect to money. Thus, if a meter of cloth costs 10 units of money, then a ready-made suit of the same material will definitely cost more than those 10 units of money.

iii. It should be an accepted medium of exchange to make it valuable. Every one in the community must accept that money in exchange of goods or service otherwise the money does not fulfill its purpose. Usually the government will issue a legal tender informing the public that the new form of money is to be used from then on. This motivates the public into accepting that currency.

Barter

Not every situation warranted the usage of money in the old days as another form of trade also existed; one that allowed to exchange an article for another one. Hence, a farmer could exchange his wheat for a chicken or a haircut from the barber. This form of trade was known as barter and was fairly common in the old days.

Islamic Gold Dinar

A Socio-Economic & Regulatory Analysis
Introductory Remarks

Money plays a vital role to the economy of any country, not only for providing a medium of exchange but also for the basic survival of the economy of the country. Traditionally, many things have been used by man to accommodate trade and be used as money such as sea shells, gold, silver, special type of stones and so on. Currently the world is using the paper money as the official medium of exchange between individuals and institutions. So far, the system has managed to survive many financial crises and it seems to be in use for many years to come. Unfortunately, the paper money system does have its flaws including some that make it an unacceptable medium in the eyes of Islam. These flaws are discussed in this paper along with an alternative system that can be used by the world communities. This new system is one that is sure to be just and also in accordance with the Islamic injunctions. This paper however seeks to analyze on different aspects of political-regulatory issues for the possible implementation of gold currency in the contemporary reality.