Dinar and Dirham: Islam’s Anti-Inflation and Anti-Riba Monetary Fortress

Dear readers, let us conduct a simple thought experiment. If your grandfather in 1990 kept Rp 100,000 in paper money under his mattress, at that time it might have been enough to buy a large goat. However, if you found that paper money today, it would not even be enough to buy 2 kilograms of goat meat.

Where did the value (purchasing power) of that money go? Did the goat become more expensive, or was the value of the money secretly “stolen”?

This is the greatest and most neatly concealed crime of the modern Capitalist system: Paper Money (Fiat Money) and Inflation. Through central banks, Capitalist nations can print money out of nothing, which automatically robs the value of the savings and labor of ordinary people.

Islam, with the perfection of its sharia, closed this door of robbery tightly 14 centuries ago. Through tsaqofah drawn from the book Nizhamul Iqtishadi fil Islam by Sheikh Taqiyuddin an-Nabhani, we will dissect the robust Islamic monetary system: The Gold and Silver System (Dinar and Dirham).

Let us explore why returning to the Dinar and Dirham is not merely historical romanticism, but a shar’i obligation and the only way out of the recurring global economic crisis.

1. Introduction: Rubber Ruler vs. Iron Ruler

Money is essentially a medium of exchange and a measure of value. As a measure of value, money must be stable.

Visual Analogy: Imagine you are a carpenter building a house. You need a ruler to measure wood. If you use an Iron Ruler (Gold/Silver), the length of 1 meter will always remain the same, whether today or 100 years from now. Your house will be built precisely.

But what if you use a Rubber Ruler (Paper Money/Fiat)? Today you stretch it to 1 meter. Tomorrow, the rubber has stretched to 1.5 meters. You will never be able to build a straight house. That is what is happening to the world economy today. Prices are never stable because the “measuring tool” (paper money) keeps stretching due to careless printing by central banks.

The Islamic economic system requires the use of an “iron ruler” whose value is intrinsic (derived from the object itself), not a “rubber ruler” whose value is based only on the force of legislation (fiat).

2. A Brief History of the Betrayal of Paper Money

How did the world become trapped in a paper money system?

Originally, in the past, paper money was merely a receipt (debt instrument) representing gold stored in a bank. If you had a receipt worth 10 grams of gold, you could exchange it for real gold at the bank at any time (Gold Standard).

However, Capitalist bankers realized one thing: people rarely withdrew their gold all at once. So, greedily, bankers began printing paper money receipts far beyond their gold reserves. This was the origin of the modern riba system (Fractional Reserve Banking).

The climax came in 1971, when US President Richard Nixon committed the greatest betrayal in world monetary history, known as the Nixon Shock. He unilaterally severed the link between the US Dollar and Gold. From that day, the US Dollar (and all world currencies pegged to it) became Fiat Money—empty paper money not backed by a single gram of gold.

Since 1971, the world has entered an era of unending financial crises, rampant inflation, and mounting national debts.

3. The Shar’i Obligation to Use Gold and Silver

Is the use of Dinar and Dirham merely a “recommendation” for economic stability? No. In Islam, making gold and silver the currency standard is a Shar’i Obligation.

Sheikh Taqiyuddin an-Nabhani explained that many shar’i laws are absolutely tied to gold and silver by Allah ﷻ and His Messenger. Among them:

Zakat Mal Law: The Messenger of Allah ﷺ set the nishab (minimum threshold for zakat) specifically in gold and silver. The nishab for gold is 20 Dinars (approximately 85 grams), and for silver is 200 Dirhams (approximately 595 grams).
Hand Cutting Law (Sariqah): The punishment of hand-cutting for thieves can only be applied if the stolen item reaches a minimum threshold (nishab sariqah). The Messenger of Allah ﷺ set this at 1/4 of a gold Dinar or 3 Dirhams of silver.
Blood Money Law (Diyat): The penalty for accidental killing is set at 1,000 gold Dinars or 12,000 silver Dirhams.
Exchange Law (Sarf): Strict rules about currency exchange to avoid riba (Riba Fadhl and Riba Nasi’ah) were specifically mentioned by the Messenger of Allah ﷺ using gold and silver.

The Messenger of Allah ﷺ said:

الذَّهَبُ بِالذَّهَبِ، وَالْفِضَّةُ بِالْفِضَّةِ، وَالْبُرُّ بِالْبُرِّ، وَالشَّعِيرُ بِالشَّعِيرِ، وَالتَّمْرُ بِالتَّمْرِ، وَالْمِلْحُ بِالْمِلْحِ، مِثْلًا بِمِثْلٍ، سَوَاءً بِسَوَاءٍ، يَدًا بِيَدٍ

“Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like, equal for equal, hand to hand…” (HR. Muslim no. 1587)

The fact that Islamic Sharia ties these crucial laws to gold and silver proves that the currency standard in the Caliphate State must be based on Gold and Silver, not fiat paper money.

4. Definition and Standards of Dinar & Dirham

So, what exactly are the standards of the Dinar and Dirham?

Dinar is a pure gold coin (22-24 karat). During the time of the Messenger of Allah ﷺ and Caliph Umar bin Khattab (RA), the weight of 1 Dinar was set at 1 Mitsqal (equivalent to 4.25 grams of gold).
Dirham is a pure silver coin. The shar’i weight of 1 Dirham was set at 7/10 of the weight of a Dinar (equivalent to 2.975 grams of silver).

Table 1: Islamic Monetary Standards

Currency	Raw Material	Shar’i Weight	Primary Use
Dinar	Gold	4.25 grams	Large-scale transactions, savings, dowry, international trade
Dirham	Silver	2.975 grams	Medium-scale transactions, traditional markets, wage payments
Fulus	Copper/Other	Per policy	Small change (fractional) for very small daily transactions

(Note: Fulus is not a primary currency. It is only minted by the Caliphate as small change to facilitate small transactions, and its printing is strictly limited so its value does not collapse).

5. Inflation: The Hidden Theft by Capitalist States

Why is paper money (fiat) so fiercely defended by Capitalist nations today? The answer is simple: because paper money is the most legal tool of mass robbery.

Imagine a Capitalist nation is heavily in debt to finance a war or cover a budget deficit. Instead of raising taxes that would make the people angry and rebel, the government orders the Central Bank to print new paper money out of nothing (often called Quantitative Easing).

When this new money enters the market, the amount of money in circulation becomes too large compared to the amount of goods (rice, clothes, cars) available. As a result (according to the law of Supply and Demand), prices of goods will rise. This is what is called Inflation.

Inflation is not a natural phenomenon. Inflation is robbery. When the government prints new money, the purchasing power (value) of the paper money in your wallet is silently siphoned into the newly printed government money. You feel your salary has increased, but your ability to buy rice has actually decreased.

This is the injustice forbidden in Islam. Printing money without gold backing is equivalent to consuming people’s wealth unlawfully.

6. Advantages of the Gold and Silver System

If the Caliphate stands and reinstates the Dinar and Dirham (Bimetallic System), what extraordinary benefits will humanity experience?

1. Intrinsic Value Immune to Inflation

Gold has its own value (Intrinsic Value). From the time of the Messenger of Allah ﷺ to today, 1 Dinar (4.25 grams of gold) has always been sufficient to buy 1 to 2 mid-range goats. Its value has never stretched. A laborer’s wage paid in Dinar will never be eroded by inflation.

2. Locking the Government’s Hands from Greed

Under the Caliphate system, the government cannot print money carelessly to cover budget deficits. If the Caliph wants to mint 10,000 new Dinars, the state must actually mine 42.5 kilograms of gold from the earth. This forces the government to be disciplined and honest in managing the Baitul Mal.

3. Destroying US Dollar Hegemony

Today, the United States colonizes the world with sheets of Dollar paper. They print Dollars, then use them to buy oil from the Middle East and agricultural products from Indonesia. If the Caliphate implements the gold Dinar, the Caliphate will reject the US Dollar. The US will be forced to pay for Muslim oil with real gold. This will quickly collapse Western economic hegemony.

4. Stabilizing International Trade (Exchange Rate)

Under the paper money system, the exchange rate of the rupiah against the dollar can crash overnight due to forex speculators (like George Soros). Under the Dinar and Dirham system, exchange rates between nations will remain fixed and stable, because the benchmark is the physical weight of gold and silver itself.

7. Paper Money in the Caliphate State (Substitute Money)

Is the Caliphate completely forbidden from using paper money for practical reasons (such as carrying large amounts of money)?

Sheikh Taqiyuddin an-Nabhani explained that the Caliphate may issue paper money, provided its status is Substitute Paper Money (Nuqud Waraqiyah Na’ibah).

This means that paper money is merely a receipt or exchange tool backed 100% by gold and silver in the Baitul Mal vault. If the state prints paper money worth 1,000 Dinars, then in the state vault there must truly be gold weighing 4,250 grams. Every citizen has the right to exchange that paper money for real gold at any time without conditions.

With this 100% backing system, paper money is merely a physical representative of gold, so artificial inflation will never occur.

Table 2: Differences Between Fiat Paper Money and Substitute Paper Money

Aspect	Fiat Paper Money (Capitalism)	Substitute Paper Money (Caliphate)
Intrinsic Value	Zero (Only paper and ink)	Fully represents the value of gold/silver
Gold Backing	0% (Only government promise)	100% (Physical gold stored in Baitul Mal)
Exchange Right	Cannot be exchanged for gold at the central bank	Can be exchanged for physical gold at any time
Inflation Risk	Very high (Can be printed without limit)	Zero (Printing limited by actual gold quantity)

8. Answering the Doubt: Is the World’s Gold Stock Sufficient?

Capitalist economists often raise the objection: “The Gold System can no longer be implemented because the world’s gold stock is not sufficient to facilitate modern trade transactions reaching trillions of dollars.”

This is a misleading syubhat (confusion).

First: The value of gold is not static. If the amount of goods and services in the market increases rapidly while the amount of gold remains the same, then automatically the purchasing power of gold will rise. This means 1 gram of gold in the future will be able to buy far more goods than 1 gram of gold today. Transaction needs will naturally adjust to the value of gold.

Second: Islam uses a Bimetallic System, namely Gold (Dinar) and Silver (Dirham) running side by side. The use of silver for medium transactions will greatly support the need for money circulation.

Third: In a real economy (without riba), money does not need to be as abundant as it is today. Money appears “insufficient” today because trillions of dollars are locked in the non-real sector (stock markets, derivatives, forex markets) that produce nothing. In Islam, because these non-real sectors are forbidden, the circulation of Dinar and Dirham will focus purely on the real sector (buying and selling of goods and services), which is much healthier and more efficient.

9. Exemplary Story: The Resilience of the Dinar Throughout History

History proves the resilience of this system. During the Abbasid Caliphate, the Islamic gold Dinar became the international currency accepted from Spain to the borders of China.

Even European kings in the Middle Ages often minted their coins imitating the design of the Abbasid Dinar (complete with its Arabic inscriptions) so their money would be accepted in international trade, because the Islamic Dinar was known for its gold purity standard that was never compromised by the Caliph.

This stability lasted for more than 1,000 years. Mass inflation and currency collapse (hyperinflation) such as occurred in Germany (1920s), Zimbabwe, or modern Venezuela, were never recorded in the long history of the Islamic Caliphate that applied a pure bimetallic system.

10. Conclusion: Freeing the Ummah from the Shackles of Paper Money

Dear readers, the current fiat paper money system is a modern magic trick. It enchants empty paper into a tool for robbing the real wealth of Muslims (oil, gold, forests) and transferring it to the vaults of bankers and Western nations.

Returning to the Dinar and Dirham is not merely an economic step, but rather a step of liberation and obedience to Sharia.

It stops inflation that steals the sweat of ordinary people.
It destroys the Riba system (Fractional Reserve Banking) from its roots.
It establishes justice in international trade.
And most importantly, it perfects the implementation of Allah’s ﷻ laws (such as Zakat and Diyat).

Islamic Monetary Formula:

Healthy Money = Dinar (Gold) + Dirham (Silver) + Free from Riba + Free from Printing Manipulation

However, this Dinar and Dirham system can never be implemented independently by individuals or small communities. It is a state monetary system. It can only be perfectly established by a giant political institution that has full sovereignty and does not submit to the dictates of the IMF or World Bank. That institution is the Islamic Caliphate.

Prayer for Economic Justice

“O Allah, destroy the riba system that chokes this ummah. Return to us Your just economic system, and hasten the establishment of the Caliphate that will protect our wealth and honor. Aameen.”

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Dinar and Dirham: Islam's Anti-Inflation and Anti-Riba Monetary Fortress

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