The banking system has started in Istanbul at 1840….
But… Islamic community just accept that system 37 years later…
DINAR
comes from Persian root word;dinarius
DIRHAM
Comes from Rome root word;drahmah.
BULLION
JEWELLERY
COIN
MONEY’S CRITERIA
According to Prof. Dr. Mohd. Ma’sum Billah, money in any form must have three attributes that make it acceptable to the public :
It must be able to be storedmoney. 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.
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.
It should be an accepted medium of exchange to make it valuable. Everyone 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.
Gold has intrinsic value. Due to its beauty, rare and unique nature, gold is valued by mankind. Since 5000 years ago until today, mankind still value gold. Historically, gold has been a proven method of preserving value when a national currency was losing value.
In addition, the price of gold is always increasing from time to time. By saving a portion of gold as your asset you already have a good financial insurance policy. In future, gold will be an important asset to mankind.
Pay zakat
Literally, zakat means grow ( in goodness ) or ‘increase’, ‘purifying’ or ‘making pure’. So the act of zakat means purifying one’s wealth to gain Allah’s blessing to make it grow in goodness.
“My mercy encompasses all things, but I will specify it for the righteous who give zakat” (7:156)
Zakat cannot be paid with a promise of payment.Zakat can only be paid with tangible things. It cannot be paid with a promise to pay or a debt, called in Arabic dayn.
In the beginning, the zakat was paid with dinars and dirham. Under Islamic law, zakat is to be paid in gold or silver, not paper currencies without any intrinsic value.
Paper-money is called fulus, because it only represents money and does not have value as merchandise. It follows that since Zakat cannot be paid in fulus, which has no value as merchandise, it cannot be paid in paper-money, which value as weight of paper is null.
On this basis, it becomes clear the urgent need to restore the use of the Dinar and the Dirham as payment of Zakat
To Pay Mahr
Mahr is some amount that has to paid by a husband to his wife in marriage. It is paid as an honour and respect and to show that he has a serious desire to marry her. This also shows that he is not simply get married without any sense of responsibility and obligations on his part.
“It indicates the sincerity of the husband`s desire for his wife. In the religious laws before us the dowry used to go to the guardians”
AS MEDIUM OF EXCHANGE
The Gold Dinar is bullion gold coin primarily used in all the Islamic countries. They are a legitimate medium of exchange. The Gold Dinar is also known as ‘Islamic Gold Dinar’ the other currency used in Islam is the silver coin ‘Dirham’.
Gold's beauty, scarcity, unique, and the ease by which it could be melted, formed, and measured made it a natural trading medium. Gold gave rise to the concept of money itself: portable, private, and permanent.
But for nearly three thousand years (since the first Gold coins were struck in Lydia in 700 BC) Gold's primary utility has been recognized as a MEDIUM OF EXCHANGE.
AS A GIFT
Since gold is valuable and rare, that is why its value is always increasing. It can be a very good gift. This precious and valuable gold will be absolutely appreciated human. This is why we can see the older generation passing gold to the younger generation via gold jewellery and the other form of gold such as ring, necklace and bracelet.
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 surprisingly stable in relation with 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.
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 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).
DINAR,DIRHAM vs FIAT MONEY
The usage of fiat money as a medium of exchange in our daily transaction should be replaced by another thing or medium that would not oppress other people. The dinar and dirham does not have this characteristic because it is fair and just as it is using preferably gold. This special advantage will not make the government to exercise total control over it as is the case of paper money.
If fiat money is a medium of exchange, the government can print as much currency as it wishes. In contrast, using dinar and dirham as a medium of exchange, the government will no longer be able to issue more gold than is available. In addition, the value of gold is stabilizing after a period of time. This is because its value will only change when a new gold mine is found but it will not be a severe change.
Next, there will no Riba al-Fadhuly (interest with extra commodity) as the government will no longer be able to fully influence by the circulation. However, because the gold coin may be debased, the chance of exploitation will still occur. Debasement in this context is it will have less gold coin in it than is stated on the coin. As we know, Allah swt declared war for those applying interest or riba in their transaction as stated in surah Al- Baqarah verse 279
And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged. (2;279)
On the other hand, 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 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.
In contrast, 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 also 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.
Using money as a medium in the daily transaction,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.
THE QUESTION OF PAPER MONEY
And among the People of the Scripture is he who, if you entrust him with a great amount [of wealth], he will return it to you. And among them is he who, if you entrust him with a [single] silver coin, he will not return it to you unless you are constantly standing over him [demanding it]. That is because they say, "There is no blame upon us concerning the unlearned." And they speak untruth about Allah while they know [it]. (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.
