By Richard Giedroyc
Could specie once more trump fiat money? Scholars attending the recent Islamic Ideology Council meeting in Islamabad, Pakistan, think so.
IIC Chairman Maulana Muhammad Khan Sheerani is the head of this, the top religious organization in the country. At the April 26-28 meeting, Sheerani said, “The current system of economy based on paper currency is not durable because there is nothing concrete in paper currency,” adding, “We must bring back the circulation of gold and silver.”
In a paper delivered by Sheerani, the chairman blamed paper money for the unsustainable economy of Pakistan, emphasizing that precious metal coins will be necessary if the economy is to be revived. Sheerani indicated an “Islamic style” of economy will be necessary to revive Islamic principles. He was one of 26 scholars who were to present papers addressing the need to once more circulate gold and silver coins.
Sherani also announced that the council would open a continuing debate on “re-circulation” of gold and silver coins.
This is the second time within two years that an Islamic organization has called for a return to specie from fiat money. Late last year the terrorist group calling itself the Islamic State of Iraq and Syria, or ISIS, was bragging it was planning to bring the economic system of the United States to its knees by issuing gold and silver composition coins for circulation within territory the group controlled.
According to information released October 7, 2015, by the official Turkish news agency Anatolia, six unidentified foreign nationals had been arrested by the counter-terrorism unit of the Gaziantep Police Department. The six were operating a makeshift mint for ISIS in Sahinbey, a town south of the city of Gaziantep, Turkey.
The mint was already functional at the time of the police raid. Several sources indicated 56 coins in different denominations were seized, as were 12 coinage dies and other minting equipment. The coins seized have Arab language writing appearing on one side and a map of the world on the other.
In November 2014, ISIS announced it would issue seven coins. The coins were to be a gold dinar valued at $139, a gold 5 dinar valued at $694, three silver dirham denominations it valued between $1 and $9 each and two copper composition minor denomination coins of minimal value.
While IIC is concerned with the fact today’s paper money isn’t backed by anything and wants to return to what it views as Islamic principles, ISIS referred to the current world economy as being a “global economic system that is based on satanic usury.”
It appears we are currently in a world where on one hand there are countries including Denmark, South Korea and Sweden moving towards a cashless society, while there is an undercurrent of desire among several groups to return to a specie-driven economy in which money once more has intrinsic value. A balance between electronic payments and some form of physical cash is likely the best solution.
Today’s economic reality is that consumers and merchants would likely hoard gold and silver coins rather than use them, as was learned in Mexico between 1992 and 1995 when specie ringed bimetal 10-nuevos peso coins were unsuccessfully introduced into today’s fiat money markets.
As it was said in the Aug. 21, 2015, issue of Forbes magazine, “One problem is that these [precious metal] coins are stamped with a face value far below the value of the metal content.”
Actually that might be a good thing, since the intrinsic value of gold and silver composition coins changes continuously. Due to the fluctuations in the spot price of these metals, someone needs to find a way to stabilize the face value of precious metal coins if they are to be resurrected as a form of currency rather than to be treated strictly as bullion.
This article was originally printed in World Coin News.
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