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.