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Gold Dinar

Introduction:
Gold Dinar system is a plan introduced for the first time by Tun Mahathir Mohamed Malaysia prime minister in 2002, in response to the currency crisis of the scale seen in Asia in 1997-1998.Malaysia’s concern since then has been the vulnerability and volatility of the money, a bane suffered by this country and others in the regions in 1997-1998 that it now wants to avoid or minimize. Having one of the most open economies, Malaysia is often at the mercy of swings in its currency. Though pegging the Malaysian Ringgit to US Dollar in 1999 has brought some semblance of stability, the currency is nonetheless still subject to constant volatility with other currencies.
Just as the capital-control measures the government introduced in response to the financial crisis in 1998 were initially viewed with cynicism by many, the Gold Dinar plan has its share of critics and supporters.
In order to understand the Gold Dinar system, it is extremely important to define some concepts such as, money, fiat money, gold- backed system, bank’s reserve requirement (section1). The historical background of the monetary system and the collapse of the Bretton Woods system in the seventies will help us understand why many economists refuse any return to Gold-backed system (section2). Section three will be devoted to elaborate on the Islamic Gold Dinar System, its advantages, applications in both domestic and intra national levels and the main objections that have been arise against it.

SECTION ONE: DEFINITION OF MONEY, FIAT MONEY, BANK’S RESERVE REQUIREMENT, GOLD & GOLD DINAR
This preliminary section will be devoted to set the definition of the main concepts of the monetary system such as: money and money creation process, bank’s reserve requirement, Gold and Gold Dinar.
1.Money
Money is anything that is generally accepted as payment for goods and services and repayment of debts. The main uses of money are as a medium of exchange, a unit of...