Recent pictures on social media during the past few hours purporting to come from Islamic State-controlled Syria show newly minted coins that are allegedly the first circulating currency minted by the Islamic State. The currency is known as the “Islamic Dinar”.
The coins shown in the photographs are 1 dinar coins and are apparently made of solid gold. For this reason, the currency is effectively gold, so its value should be identical to the precious metal.
The design of the coin shown includes images of a world map and seven stalks of wheat, referencing the Koranic verse “Those who spend their money in the name of Allah are like a seed that has yielded seven wheat stalks, in each stalk there are a hundred seeds, and Allah multiplies … for whoever He wishes.”
The utilisation of a gold standard for the currency is really an economic necessity for the Islamic State, as any fiat currency they would otherwise issue – backed by debt – would be virtually worthless internationally. However, it is being spun by them politically as a rejection of the “Satanic” global financial system. Ironically, many free market libertarians and other critics of fiat currencies would agree with them on this point!
The forthcoming introduction of the currency was heralded last November in an announcement by the Islamic State, in which they promised to introduce silver and copper coins, as well as the gold coins whose images are being circulated today.
Apparently, the Islamic State has also established a Central Bank, known as the Muslim Financial House. While this body may have a role in directing economic policy, don’t expect it to be holding FOMC-style press conferences just yet.