In the name of God, the compassionate the merciful
Dollarization is the word used to describe the role of the US dollar in the global economic and political system during the last 70 or 75 years, as the number one dominant currency.
The dominance of the dollar as an international currency for trade meant that the USA could unduly pull in the produce of the world by just printing their dollar and using it as a medium of exchange.
Such an international trade attitude promotes inflation and disregards what Islamic finance scholars termed as (IWAD) counter value. It also allows the USA to unduly borrow more money than any other country in the world. The dollar has also been weaponized by the USA to sanction countries who disagree with American foreign policies and often the American way of life.
For example, countries such as Russia, Iran, Cuba, Iraq, etc. have been economically sanctioned by the USA. These economic and political powers wielded by the US are considerably due to the dominance of its currency in global trade and exchange.
Also read: https://mypublisher24.com/ndc-gives-john-mahama-a-third-chance-to-redeem-himself/
However, in the last couple of decades, there has been a decline in the dominance of the dollar because more and more of the world’s trade, more and more of the world’s investment, and more and more of the world’s reserves held by central banks around the world is no longer held in dollars but in gold and other currencies.
Russia, Brazil, India, South Africa, and China collectively known as the BRICS, have had enough of the negative effects of the dollarization on their economies and have now begun the de-dollarization process of their respective economies.
They have collectively agreed to use not a single currency, the dollar or euro, but a multi-polar alternative currency within the BRICS jurisdiction, which will definitely become a third currency force in international trade. In other words, the BRICS have started to undo one major injustice in the international financial system. This brings us to the gold standard system of money known in Islam as the Dinar which has proven to be more just than any other financial system.
The Dinar is typically referred to as the ‘currency of Islam’, This is due to the fact that the first currency minted by an Islamic government was that of the gold Dinar and silver Dirham. It was the caliph Abdul Malik ibn Marwan who ordered the minting of these currencies in the year 76 AH, i.e. 695 CE.
However, on a global level, the gold standard was in practice throughout the world until WWI. It is regarded by almost all past civilizations as the most appropriate form of medium of exchange. The gold standard tends to eliminate almost all the problems associated with the fractional reserve system of money creation and money destruction. It is important to note that gold has proved to have all the innate characteristics of a medium of exchange, based on the following:
• Gold is timeless/ durable.
• Gold is portable.
• Gold is divisible and malleable.
• Gold is rare.
• Gold is finite and has scarcity.
In addition to these advantages, the renowned Malaysian Islamic finance scholar Ahamed K.M. Meera has made some more positive observations about the gold standard system:
Maintains a stable monetary system.
It is an excellent medium of exchange.
It minimizes speculation, manipulation and arbitrage.
It minimizes business cycle effects.
Dinar diversifies risks and promotes trade.
Dinar promotes a just monetary system.
Dinar curtails certain social problems such as poverty through the erosion of purchasing power of income, unequal distribution of income, forced child labour, poor housing, poor diet, poor health, poor education and promotion of crime.
Advantages associated with the dinar system of trade are myriads, and due to the innate properties of gold, the gold standard makes it not only appealing to Muslim nations but also other several civilizations in the past, and even many modern nations and societies.
An economic system must be so just that, its benefits and effects will trickle down not only to the lowest of individuals on the social class ladder but also to even animals and the environment at large.
Thus, the whole ecosystem must benefit from an economic system. the world has now become a village where the expectations of its inhabitants are the same everywhere; the need for shelter, a good three-square meal a day, quality education, gainful employment, and quality healthcare, as proposed by the Sustainable Development Goals (SDGs). May Allah accept it from us and make it beneficial to Ghanaians and beyond.
And Allah knows best!
For more readings, you can check the following books: “Why was gold the dominant form of Money? By Davidove. “The Islamic Gold Dinar” by Ahamed K.M. Meera.
YAHAYA ILIASU MUSTAPHA
The writer is an Islamic Banking and Finance patron and advocate in Ghana.
Email: yahaya0246873726@gmail.com
Facebook account: facebook.om/Yahaya.iliasu.94
0506218343 / 0246873726
