philosophy & principle of islamic banking (isb baru

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  • 1. PHILOSOPHY & PRINCIPLE OF ISLAMICBANKING (ISB 546) THE ISLAMIC GOLD DINAR Presented by: EKA PUSMAWATI BT ABD WASIR HUZAIMAH BT JAIMIN SOFIAH BT ARIP SMELTA AK JUDIWAN RASHIDAH BT WAN HASSAN

2. History of Gold DinarMuslims used gold and silver by weight and the dinar and dirhams that they used were made by the PersiansThese coins differ from the original ones in that an Arabic inscription is found in the obverse margins, normally reading "in the Name of AllahGold and silver coins remained official currency until the fall of the Khalifah 3. Modern History the Islamic Dinar system being proposed in this modernera is basically an electronic payment system that is goldbacked As a consequence of currency crisis in Asia, in first of1997, then Prime Minister of Malaysia Mahathir BinMohamad proposed introduction of Islamic Gold dinar ascurrency for international trade in the Muslim world . It was supposed to suppress the too overly tradedAmerican dollar and ensure that dollars instability doesnot affect international trade because Islamic gold dinarwas to be tied to price of gold and thus provide stablevalue of the currency 4. Introduction of Gold DinarGold dinar known as an Islamic currency andwhich is to protect its sovereignty and to promotea just monetary system, a nation my have toredefine money and eliminate interest rates fromthe economy Claimed by a Muslim scholar, Ibn Khaldun thatGod created the two precious metals, silver andgold to serve as a measure of all commodities Gold had played an important role for manycenturies in a way or another until the end ofBretton Woods system 5. Differences between Current Monetary System & Dinar SystemCurrent Money SystemPaper money quantity can be increased at will any time since there will always be demands from the public to increase the quantity of money which would cause inflationDinar systemFixed exchange rates resulted the absence of exchange rate instability 6. Why Gold Dinar?Problems in the current monetary systemMoney Creations: The Magic of fiat money and fractional reserve bankingIslamic Banks, Money Creation and the Law of One PriceSocio Economic Effects of Money Creation 7. Implication of the Islamic GoldDinar SystemStable MoneyExcellent Medium of ExchangeMinimize Speculation, Manipulation and ArbitrageDinar Promotes a Just Monetary SystemSome Special Problem ReduceDinar Diversifies Risk and Promotes TradeBusiness Cycle Effect Minimized 8. How Dinar can help in EconomicCrisis?Gold does not inflate in value as it is a commodity and thus has an intrinsic valueIf gold coin were used, then counterfeiting would also be checkedIf all these exchange rates are eliminated by means of a single currency like the dinar, then speculation, arbitrage and manipulation will be very much removed if not eliminated 9. Future Prospect and ChallengesMany people are aware of the shortcomings of the present system and advancement in IT technology such as the emergence of e- dinar, Gold Money and so onDoes not required substantial new regulationsGold has high prospect as a single global currency 10. The challengesInstitutional setbackUS have emerged as sole superpower in the world today after the cold wars where US dollar play the roles as international currencyPossible attempts to fail the systemThe success of this system depends on a gradual increase in the number of people using gold as money 11. Opinion from Islamic Jurisprudence about Islamic Gold DinarPrice of stock market can give the dramatically effect as the Dollar continue to dropGold Dinar wants to threat U. S Dollar because some of those economies have not fully recoveredFormer Prime Minister Mahathir Mohamed said that Arab Saudi should sell oil for gold not the dollar in order to avoid being short changed by a decline in U. S economy 12. Conclusion Islamic Gold Dinar and the Dirhams or the silvercoins should been applied in Malaysia in order toovercome the most if not all the shortcoming andthe negative effects of the present day fiat moneyinterest- based system The gold dinar and the silver dirhams called for there- establishment of shariah base trading The movement of Islamic Gold Dinar and the SilverDirhams had been stable compared to papermoney and had been proved by using the GoldDinar and Silver Dirhams as money is not a stepbackwards into the medieval years 13. THANK YOU