Nuradli Ridzwan Shah Mohd Dali1
Lecturer, Universiti Tenaga Nasional
Kampus Sultan Haji Ahmad Shah
26700 Pahang
Tel: 09-4552028 Fax: 09-4552020
[email protected]
Muhammad Rubini Kertapati4
Faculty of Business and Economics
University Kebangsaan Malaysia
43600 Bangi, Selangor
Tel: 016-2518987
[email protected]
Hanifah Bte Abdul Hamid2
Lecturer, Universiti Tenaga Nasional
Kampus Sultan Haji Ahmad Shah
26700 Pahang
Tel: 09-4552037 Fax: 09-4552020
[email protected]
“PUBLIC PERCEPTIONS TOWARDS GOLD DINAR APPLICATION: AN ONLINE
SURVEY. ”
Hifzur Rab3
Rahmat Nagar, Jhapia,
Bamrauli, Allahabad 211012
India
[email protected]
ABSTRACT
Keyword: Gold Dinar, Currency
The former Malaysian Prime Minister, Mahathir Mohamad has suggested the usage of Gold Dinar as an international
payment settlement among OIC countries as one of the solutions to the Asian financial crisis and the unity of the
countries. However, the implementation of gold Dinar seems impossible because of IMF prohibition (Second
Amendment to the Articles of Agreement in April 1978 which eliminate the use of gold as the common denominator of
the post-World War II exchange rate system and as the basis of the value of the Special Drawing Right) and it is
expected that the mechanism would eliminate the power of central banks to use monetary policy in maintaining price
stability. Despite the hurdles, the demand for the return of the gold Dinar from intellectual discussions is high. In
respond, an online survey has been conducted especially designed to identify the perceptions of the public towards the
implementation of Gold Dinar as a currency.
Introduction
The Asian currency crisis has affected the South East Asian countries seeing several countries economics
plunging downward damaging the domestic financial systems, while many companies were financially
distress. The crisis was promulgated from the currency speculators activities, which led the to the
depreciation of the currency due to lack of confidence to the country’s economic condition. Malaysia use
capital control to overcome the currency from depreciating and pegs the Malaysian Ringgit at RM3.80 to one
USD until present.
Literature Review
A decree was issued in Granada by Umar Ibrahim Vadillo (1991, 2002) stating that uses of fiat money is
injustice provoking the Muslim community to reevaluate the existing financial system in upholding the
Syariah economy. Furthermore he mentioned that the Islamic banking is fraudulent since the Islamic banking
fraternity uses the fiat money duplicating the conventional system (Vadillo, 1991,2002).
1
However the majority Islamic scholars or ulama approve the usages of fiat money or paper money therefore
his decree did not get many attentions from the Muslims. However, the 1997 Asian financial crisis has
opened a new spectrum of rethinking on the existing monetary system in order to find a stable and justice
monetary system. The revisit of gold Dinar has come into picture and attracted many attentions of economists,
politicians, business leader and the former Malaysian Prime Minister Mahathir Mohamed. He urged the OIC
1
The author is a PhD scholar at the Faculty of Business & Economics, Universiti Kebangsaan Malaysia.
2
The author is a lecturer specializing in Management Information System
3
Chief Chemist –Oil and Natural Gas Corporation Ltd India.
The author is a master scholar at the Faculty of Business & Economics, Universiti Kebangsaan Malaysia.
4
countries to adapt the gold Dinar mechanism as the international trade payment settlement before giving way
to Abdullah Badawi.
The idea was supported by academicians and practitioners from all around the world including Ahmad Kamel
Meera Mydin (2002,2004) who also urges the OIC countries to start using gold Dinar for International trade
settlement. In this mechanism, the participation of central banks and commercial banks are vital using the
letter of credit as its vehicles. This mechanism is not intended to replace the usage of the domestic currency
for local transactions because it will be used only for international trade settlement.
However, scholars also were rethinking to look at the Gold Standard system as one of the alternative. In
promoting the interest free economy, Tarek el-Diwany (2002) introduces the 100 percent gold-backed
banking system and explains on how the existing financial system could be transformed into an interest free
economy. Hifzur Rab (1995/1998) has shown that the use of fiat money causes massive exploitation of the
have notes and its use as unit of account generates massive fraud. He has discussed problems it creates and
suggested some solutions (2002).
Later on Mohamed Nor Yakcop (2002) , presented a paper on the mechanism of gold Dinar, which was an
extension to the BPA into Multilateral Payment arrangement, which involves more than two countries. The
MPA would resolve the problems of scarcity of gold because only a little amount of needed to be set-off for a
big volume of transactions. This mechanism seems viable but it needs the will power of the OIC countries to
implement the system.
Even though with the usage of gold Dinar in international trade could reduce speculative menace but it would
not eliminate the speculative activities entirely since the price of gold or currencies will fluctuate and
therefore it will be exposed to such activities. However, the speculation activities could be reduced to its
minimum level (Nuradli Mohd Dali, Abu Bakar Mohd Yusof, Norhayati Mat Husin, 2002). Consequent
papers supporting Dinar stressed that the implementation of gold Dinar could be the platform of Islamic unity
(Umar Azmon, 2003 & Abdelhamid Evans 2003).
The fiat money is also associated with seignorage as pointed out by Jaafar Ahmad (2003) which could reduce
its purchasing power parity especially for developing countries in the OIC Comparison between the electronic
payment system (E-Dinar) and the bilateral payment arrangement system were analyzed by Nuradli, Hanifah
and Bakhtiar (2003,2004) to find out the most viable system that should be implemented and its market
segmentation. The electronic payment system such as E-dinar is targeted for small businesses and individual
whereas the BPA system is target to the exporters and importers and thus it will have impacts to domestic
economies and balance of payment. It has been pointed out that the BPA system is more viable as compare to
the electronic payment system due to the volume of trade that will involve and the amount of cooperation
among the OIC countries that will involve in the implementation (Nuradli Mohd Dali, Hanifah Abdul Hamid,
Bakhtiar AlRazi 2003, 2004).
Research was also conducted on the MSC companies to see whether the companies are willing to use the gold
Dinar as payment settlement and more than 40 percent of the respondents interviewed agreed to use gold
Dinar since it could reduce the exchange rate risk. (Nuradli Mohd Dali, Hanifah Abdul Hamid, Azwari
Kamaruddin 2003). Furthermore it could promote the economic social order and protect the consumers in
consumerism with focus on reduction of debts, reducing the gaps between the have and the have not, and
elimination of interest from mudharabah and musyarakah financing (Nuradli Mohd Dali and Norhayati Mat
Husin 2004 a & b).
Theoretical paper using the flexible model with the usage of gold Dinar seeing the impacts of gold dinar in a
full swing dinar economy making the monetary policy seems impotent. (Nuradli Mohd Dali, Fidlizan
Muhammad & Mohd Firdaus Azizan, 2004). The economy could not use the domestic monetary expansion
policy unless new gold has been discovered or gold currency is being transferred from other countries through
trading.
2
However, a previous paper on the same model was also developed by Nuradli Mohd Dali and Abdul Ghaffar
Ismail (2004) using the Dinar system partially or side by side with the existing fiat money. It was noted that
using this model the currency depreciation is lesser than the flexible model in the event of a domestic
monetary expansion.
Even though there are many scholars who wanted for the gold Dinar comeback the IMF regulation prohibits
for any countries to use gold as a medium of currency. The Second Amendment to the Articles of Agreement
in April 1978 eliminated the use of gold as the common denominator of the post World War II exchange rate
system and as the basis of the value of the Special Drawing Rights (IMF, 2004).
With the prohibition for the IMF members- therefore it seems impossible for any OIC countries to implement
Dinar even for international trade settlement only. Despite of the hurdles, the demand for the return to the
gold Dinar is seems high from the public. With this motivation, we conducted the survey analyzing on the
perceptions of gold Dinar from the public perspectives.
Research Objectives
1. To analyze the public perception on the implementation of gold Dinar
2. To evaluate the impacts of demographic profiles on the perception on gold Dinar
3. To assess if prior knowledge have impacts towards the perception of gold Dinar.
4. To identify challenges that has to be encountered in implementing the gold Dinar.
The Limitation of the Study
Since this is an on-line survey, it would not include respondents who do not have email facilities. This survey
could not be extended to those who do not have on-line and emails facilities due to the financial constraints.
Hypothesis
In this research it is expected that the public want to use the gold Dinar as a medium of currency instead of
using fiat money and education is also one of the most important factor that need to be stressed out in the
implementation of gold Dinar.
Justification of the Research
This research is done to mainly identify the acceptance of gold Dinar as a medium of currency among the
public in order for the country policy formulation if the Dinar is legally accepted for domestic uses.
Furthermore, it is important to see that this area could be incorporated in universities’ curriculum should we
want to implement the system. Since gold Dinar is such a comeback currency, we need more expertise in
implementing as well as monitoring this system. Furthermore, the banking and financial institutions could
contribute in opening gold Dinar counters for depositors. This survey could give a picture of the direction of
the market demand in the Malaysian financial system.
Research Scope
The online survey was posted in the Internet from 8th of October 2004 and the cut off period was on the 1st of
February 2005, which is about 4 months. Emails were sent to various e-groups and personal contacts.
Problem with currency is a vital factor in the continuing onslaught of wrong against the right.
Interest seeking and exploitative forces of economic enslavement have established a firm grip over the
resources of the world and their control and dominance has been consistently increasing. Growing
unemployment, disparity of income and wealth, poverty and deprivation, fraud and corruption,
marginalization of justice and righteousness and accompanying loss of human freedom clearly shows that
antihuman forces has usurped power and control over the globe and are trying the enslave the human race.
achieved mainly by use of fraudulent economic procedures Foremost among the economic tools being used is
interest. Next most important tool is fiat money (its depreciation). Interest and inflation are necessary and
sufficient to ensure dominance of each other. Governments are forced to borrow on interest, to agree to unjust
and exploitative terms of trade and commerce, to follow anti-people policies or the policies that weaken the
unity and strength of the country, etc. All these are intended to push the under developed and developing
countries into the debt trap and then to enslave them.
Exploitation and Fraud are integral parts of the system of interest
Amount payable in lieu of interest based finance doubles and redoubles after a period and this redoubling
continue. Suppose rate of interest is 10.41% then amount payable doubles and redoubles every 7 years. In 50
years it becomes 140 times and after 100 and 150 years it becomes 19991 and 2826581 times respectively.
The amount that is returned by previous borrowers is again lent on interest to new borrowers and therefore
this process doubling of dues continues despite the fact that many borrowers are able to repay the loan within
a few years. Naturally things grow and then decay and there is nothing real that can continue to grow in this
exponential pattern. Clearly debts created by interest-based finance can never be cleared. Number of people
below line of poverty has been increasing and many poor countries have already been trapped by the debt
created by interest-based finance. It follows that interest is a mechanism to enslave the people and any law
that enforces its payment is unjust and inhuman.
Further since it is not possible for any economy to continue to grow like this, it will have to go on reducing its
yardstick of measurement of wealth i.e., currency. Considering that manipulation of measure corrupts the
process of measurement, reduction in the quantity of wealth expressed by the yardstick of measurement is a
clear case of fraud. Considering that wealth is most widely sought after, it is clear that manipulation of its unit
represents a massive fraud. Considering that the system of interest cannot survive unless currency is
consistently depreciated (i.e., quantity of wealth expressed by currency is reduced) it is clear that fraud is an
integral part of the system of interest.
Further since currency is normally used as unit of account, its manipulation corrupts the accounting process
and thus, incorporates element of fraud in all our dealings. It confounds truth with falsehood and masses fail
to distinguish between right and wrong. Further it makes non-exploitative and interest free modes of finance
unviable. All these add to fraud corruption and deception.
4
Economy that allows interest will ever remain full with fraud and corruption, injustice, exploitation and
oppression. Greedy capitalists are thus using mechanism of interest as a tool to enslave the humanity. Thus,
Interest continues to suck the earning and wealth of the poor and transfer it to the rich. Inflation goes on
reducing the worth of the savings of the poor. Inflation allows the prices of the products of the organized
sector to be increased faster than increase in the prices of the products of the unorganised sector. It is why
prices of commodities that poor people produce and sell have risen much less than the prices of the finished
products that organized sector owned by the rich produces. Thus, every time poor people sell something to
buy something from rich people they get less and overtime it represents a colossal loss. Similarly, prices of
commodities that poor countries export have risen much less than the prices of the finished products that rich
countries export. Thus every time poor country exports something to import something from rich country they
get less and overtime it represents a colossal loss. Rich lend capital on interest and usurp most of the surplus
produced by the economy, even if the enterprise where the capital is invested make losses the lenders are
assured of payment of not only the capital but also the interest. Resultant increase in disparity goes on
reducing the proportion of people who own enough resources to employ themselves. As the people get poorer
they are not able to provide collateral required for availing interest-based finance. In the economy based on
interest any economic activity that is not able to produce surplus at a rate higher than rate of interest cannot be
run as it results in loss to its owner (entrepreneur). In the interest-based economy, expected return must be
higher than the rate of interest for any business to take off otherwise it will result in a loss for the
entrepreneur. If the interest rate were higher than the expected return, resources would be unemployed.
Clearly mechanism of interest and growing disparity of income and wealth produced by it is responsible for
growing unemployment. Further capitalism driven by interest compels labour to accept lower than just wages
as labour do not have any other alternative to sustain themselves.
3
This enslavement differs from enslavement of the bygone era in that the slave may not be aware of his state of
slavery. The slave continues to work efficiently thinking that he/she is working for himself/herself or for
his/her country or community. However, most of the fruits of his/her labour get transferred to the slavemasters through the fraudulent economic procedures leaving for him/her only what is considered essential for
his/her sustenance. This is what constitutes the so-called sustainable society. This, enslavement is being
interest can’t coexist with human dignity and freedom and justice. [Freedom is essential, if man is to be held
responsible before his lord (god).
Money
Free people used gold and silver coins as universal medium of exchange and continued to use these for
thousands of years. Gradually these were replaced by paper money firmly linked to gold and silver. The fiat
money backed by gold was as good as gold and silver coins and it was easier to transfer and store. Gradually
reserve was reduced and thus, states were in no position honour their promise to exchange the paper money
with quantity of gold/silver that was promised. Slowly link with gold and silver was completely broken and
now we have fiat money that is not linked with any known quantity of wealth. Mainstream economists record
these changes as if these were efforts to develop the economy and to ensure people’s welfare. However those
who could wisely analyse the factors that lead to these changes and the consequences thereof together with
the fact that it is not possible to believe that those who brought these changes were not aware of the
consequences are led to believe that these changes were part of the most sinister long term strategically
designed plans to enslave the people. Here we shall examine how and why this fiat money is one of the worst
antihuman developments in the history of mankind.
Fiat Money
The money we use is the fiat money. It is money only due to fiat (order) issued by government. It has value
because people need money to buy their requirements and they are not allowed to use gold or silver coins or
any other real money. It is nothing real but it represents goods and services that it can buy. Strictly speaking it
represents a basket of goods and services and it has same market value as the basket of goods and services it
represents. Thus, in reality fiat money is a basket of goods and services that it represents. Fiat money of today
is not the same as the fiat money of a year or more or less earlier or latter because it represents basket of
goods and services that contains different quantity of goods at different times. 50 percent depreciation means
the quantity of goods and services contained in the basket is reduced to half the quantity of goods and services
it earlier contained. Thus, 10 dollar of today is not same as 10 dollar of yesterday or tomorrow. It applies to
rupee, ringgit, riyal, euro etc. as well.
Real money is a definite quantity of some valuable commodity normally gold and silver, well known to the
people and that allows the people to participate actively in the process of price determination by the market.
Fiat money is complex money; people hardly understand what it is and that allows the rich owners of the
organised sector to manipulate market prices to serve their vested interests.
To understand it more clearly consider a gold coin. Its value can fall for two reasons. Firstly gold may become
cheaper with respect to other goods and secondly part of the gold may be cut off making it smaller in weight.
However, if we consider value of gold coin with respect to gold it can fall only if some part of gold is cut and
removed (from the coin). Price of any real commodity is constant with respect to itself and it can become
cheap only if part of it is removed (uniform quality is assumed). Currency is a basket of goods and services
and it become cheaper with respect to goods and services only because the quantity of goods and services
contained in the basket is reduced. Thus value of currency falls only because quantity of goods and services
that it represents is reduced.
Depreciation of Currency
The artificial reduction in the quantity of goods represented by currency leads to corresponding fall in
purchasing power of currency and thus currency that is measure of value/wealth become smaller. For the sake
of clarity, we shall restrict the use of the term, ‘depreciation of currency to this artificial reduction in the
quantity of goods represented by currency. Clearly real currency cannot be depreciated except by reducing its
content but that will be clearly understood by people and therefore cannot form basis for massive fraud and
manipulation.
5
Compared to market value the cost of production of fiat money is almost nil. For example cost of production
of a thousand ringgit notes is much less than a tenth of a ringgit. Therefore government can increase money
supply almost without limit. Further the banks that are a vital part of the system of interest create more than
90% of money supply almost free of cost. Supply of real money cannot be manipulated freely and it involves
prohibitive cost. However, it is to be noted that it is improper and misleading to talk of supply and demand in
case of fiat money. As a matter of fact total supply of money represent the number of shares in that national
out put is divided. Currency is equal to one share. To double the supply of money is to double the number of
shares and therefore each share i.e., currency becomes halved. These are the important differences between
these two types of money. Due to these differences fiat money is the worst antihuman innovation in the
history of the human race while real money is a very important facilitator of justice5.
Research Methodology
The survey contains questions with aims to get the respondents’ point of views on certain issues on gold
Dinar. The information was obtained from structured questionnaire, which was sent to respondents through
email linking it to a website. With the advance of ICT, the authors managed to get 436 respondents to answer
the questionnaires.
General Perception of Gold Dinar
Function of Money
The Uses As Currency
Gold Prevent Exchange Rate Risk
Gold Increase Trade
Gold economy needs knowledge
Payments By Gold Dinar
Conversion of Gold Dinar to Other Currencies
Figure 1: Research Framework of Public Perception Towards Gold Dinar Application
Knowledge on
Gold Dinar
influence
Acceptance of
Gold Dinar
Results and Findings
Demographic Profiles of the respondents
Approximately 65.1 percent of the respondents are male and the remaining 34.9 percent are female
respondents from a total of respondents of 436 people (Table 1a, Appendix 1). Majority of the respondents
fall into between 29 to 35 years old, which consist 31.9 percent from the total respondents followed by 19 to
23 (18.8%), 24-28 (17.2%), 36-42 (13.5%), above 42 (10.8%) and 15-18 (7.8%) (Table 1b, Appendix 1). The
respondents’ education background shows that 54.4 percent have university education while 41.7 percent
have postgraduate degree and the remaining 3.9 percent have school, primary and secondary education (Table
1c, Appendix 1).
60.6 percent of the respondents’ country origin is Malaysia, followed by Indonesia 12.8 percent, United States
of America 4.4 percent, United Kingdom and Pakistan 3.4 percent and the remaining 30.8 percent come from
various countries from around the world (Table 1d, Appendix 1). The distribution of the respondents job
position comprises 21.3 percent are executive, 20.9 percent are academician and college/university students
evenly. The remaining 40 percent comprises from variety of positions from homemakers to professionals
(Table 1e, Appendix 1).
In addition, the data on the public perception questions was tested to see whether it is normally distributed or
not using the skew test. From the result, data is found to be normally distributed since all the seven questions
statistics result are lesser than 1 (Table 2, Appendix 2).
For details on how currency depreciates please go to http://www.geocities.com/mohdddalins/hifzur_depreciation.doc
6
Findings 1:
Mean analysis of the public perception on the implementation of gold Dinar
The mean score result from the survey were categorized to 5 categories which are strongly disagree, disagree,
Maybe disagree/agree, agree and strongly agree. The ranges of mean score according to its categories are
tabulated as below:
5
Mean score
1.00 – 1.80
1.81 – 2.60
2.61 – 3.40
3.41 – 4.20
4.21 – 5.00
Interpretation
Strongly disagree
Disagree
Unsure (maybe agree/ disagree)
Agree
Strongly agree
3.45
4.18
3.15
2.82
3.86
Agree
Agree
Unsure
Unsure
Agree
Mean Interpretation
3.06
Unsure
3.94
Agree
TABLE I: The Mean Score and Interpretations for Questions Given to Respondents
Questions
The function of Gold Dinar is as the same as the fiat money or paper money
The uses of universal currency Gold Dinar as a medium of exchange for payments of
goods and services are acceptable
If gold is being used as a medium of exchange in the electronic payment system. It
could prevent the exchange rate risk associated with the paper money
With the implementation of gold Dinar, there will be a substantial increase of trade
Knowledge is vital for the implementation of gold Dinar in the business community
I am afraid that the other parties will not pay me/us using the proposed Dinar system
I am afraid that I cannot convert the gold currency to my own currency or other
currencies
Based on the Table 1, the results show that many respondents were unsure whether the Gold Dinar could
function as the same as fiat money, the acceptability of others towards Gold Dinar and the convertibility of
the gold Dinar to other currencies. However, they are in the opinion that the uses of gold Dinar are acceptable
and it will reduce exchange rate risk. Furthermore, the implementation of Gold Dinar will increase trade, and
education is vital in implementing the system.
Findings 2:
Impacts of demographic profiles on the perception on gold Dinar
Based on the Spearman’s Rho correlation (Table 3, Appendix 3) conducted on the demographic profiles of the
respondents and the perception of gold Dinar, it was found that acceptability of gold Dinar has a negative
relationship with gender (-0.210) at 95% confidence level, weak positive relationship with age (0.163) at 95%
confidence level, weak positive relationship with education (0.156) at 95% confidence level and weak
positive relationship with country origin (0.115) at 99% confidence level. Overall the gender, age, level of
education and country of origin of the respondents could have an impact to the acceptability of gold Dinar.
The prevention of exchange rate risk associated with paper in the implementation of gold Dinar also has a
weak positive relationship with age (0.133) and level of education (0.171) at 95 percent confidence level.
Overall age and level of education could have an impact to the perception whether gold Dinar could prevent
exchange rate risk.
Only country of origin has an impact on the perception of whether with the implementation of gold dinar
could increase trade with a weak negative relationship of (-0.087) at 99% significant level. Therefore country
of origin could has an impact to the perception of whether the gold Dinar could promote trade among
countries, business and individuals.
With regards to the perception of the importance of knowledge in implementing the gold Dinar, there are only
age and level of education which have a weak positive relationship (0.160) and (0.100) at 95% and 99%
percent respectively. These results show that age and education level could have an impact to the demand for
formal knowledge in implementing gold Dinar.
7
The perception of public towards the acceptability of others to use Dinar has weak negative relationship for
age (-0.101) at 99% significant level, level of education (-0.099) at 99% significant level and country of
origin (-0170) at 95% significant level except for gender with a weak positive relationship (0.148) at 95%
significant level. Thus these results show that all the demographic profiles of the respondents could have an
impact on the perception whether the other parties would use the same gold Dinar for transaction.
All four demographic gender profiles such as gender (0.203), age (-0.208), level of education (-0.185), and
country of origin (-0.195) have a mix weak relationship with the perception of convertibility of gold Dinar to
other currencies at 95 percent confidence level.
Overall, the demographic profiles of the respondents could have an impact to the perception on gold Dinar
except for the function of gold Dinar is the same as fiat money which is not significant.
Findings 3:
The assessment of ANOVA on prior knowledge and the perception of Gold Dinar.
Based on the ANOVA results it is noted that prior knowledge on the Gold Dinar could influence the public
perception on the uses of universal currency Gold Dinar as a medium of exchange (Sig. .000), reduction of the
exchange rate risk (.000), the importance of knowledge for the implementation of gold Dinar in the business
community (.001), and the convertible of the gold currency to other currencies (.016) since the significant
levels are below than 0.05. However, for the other three perceptions, prior knowledge does not have a
significant different for the function of gold is as the same as paper money, increase of trade in the
implementation of Gold Dinar and the acceptance of others to use gold Dinar.
Findings 4:
Challenges that have to be encountered in the implementation of gold Dinar.
Survey results based on the figure 2 below; show the obstacles and hindrances that the respondents might face
in the implementation of gold Dinar, which ranked as follows:
1. The willingness of other to accept gold Dinar
36.9 percent
2. Comfortable with Euro, Dollar and other currency
18.8 percent
3. Lack of Will Power
13.3 percent
4. Scarcity of Gold
13.3 percent
5. Gold quality assurance
8.3 percent
6. Security issues
6.0 percent
7. Fraud
3.4 percent
Figure 2. The Major Hindrance of Implementing Gold Dinar as a Medium of Exchange
8
From the result it is found that the respondents are skeptical about the willingness of others to accept gold as a
medium of exchange in performing daily transactions. About 18.8 percent respondents are comfortable with
Euro, Dollar and the existing currencies. The scarcity of gold has an impact to the implementation of gold
Dinar. It is interesting to find out that gold quality assurance, security issues and fraud comprises only 17.7
percent from the total respondents.
Discussion
There are some discussions that need further exploration according to the finding results. Firstly, the
uncertainty of many respondents whether the gold dinar could function as money even though it is acceptable
and logic. This finding is reflected by the real example that no countries nowadays are using gold dinar as a
medium of exchange, especially using gold dinar as a function of payment transaction that replace the fiat
money. One needs to make some great innovations towards the using of gold dinar. Then we could see the
performance of gold dinar compared to fiat money. This will then enhance the public confidence to
implement gold dinar to replace fiat money functions.
Nevertheless, many respondents seem to agree that the uses of gold dinar are acceptable and the usage of gold
dinar will reduce exchange rate risk. The implementation of gold dinar will increase a trade. It is the role of
the government to further decides whether or not to use gold dinar instead of fiat money.
The main related issue of gold dinar however, lies in whether the use of gold dinar as a medium of exchange
could remove the uncertainty. Again it is pointed out that the use of gold dinar is depending on the
willingness of the government to build the innovations towards a better economic condition.
Secondly, the implementation of Gold dinar depends on the knowledge and level of educations. The interest
system has gone too far now. Most people seem to have a better understanding about this system. The
government needs to rebalance the system by ‘reintroducing’ the gold dinar system. This is the first step that
needs to be done before we could further implement gold dinar. Public whom equipped with well gold dinar
education, will have positive perception about this system, thus will create balance situation. Universities as a
knowledge warehouse play a major role in educating our next generation. The universities’ curriculum
should incorporate gold dinar as one the integral subjects in economics, finance, accounting and business
management.
The government could then setup gold dinar side by side with fiat money and eventually replace fiat money
once gold dinar is widely used. If the government takes action to introduce the gold dinar, then people will
begin to aware the willingness of government about this system. This will lead to a better perception and
knowledge about gold dinar.
Thirdly, the issue about the scarcity of gold remains low compared to the issue of the willingness of others to
accept gold dinar. It is the fact that with fiat money the government could increase money supply almost
without limit but not with gold dinar system. Again, the issue remains on the willingness of the government or
the acceptance of gold dinar not in the scarcity of gold. However the limitation of the gold reserves is
acceptable. The strategy of implementation of gold dinar remains on the real conditions of the country.
Finally, we already know that gold has a low volatile price compared to the currency. This will lead to a
certain conditions to be expected by the agent of economics. Better expectations that lead to a better
productivity and efficiency. The remain issue is not only about injustice, poverty or the economic issue such
as inflation, uncertainty, unemployment, but more to the issue of productivity and efficiency.
However we need to conduct more research on the implementation of gold dinar using a specific sample (e.g.
economic agent such as government, business community). We also need to explore the perception of
economist about this issue.
9
REFERENCE
Ahamed Kameel Mydin Meera.(2002) The Islamic Gold Dinar. Kuala Lumpur: Pelanduk Publications.
Ahamed Kameel Mydin Meera (2004). The Theft of Nations. Returning to Gold. Kuala Lumpur: Pelanduk
Publications.
Amir Hassan, Umar Azmon. (2003 July). Dynamics of The Dinar And Its Inevitable Return. Proceedings of
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The authors would like to apologize for not including the appendices in the paper due to the length
constraints. Alternatively, Appendix 1 – 5 could be downloaded from the author’s website at
http://www.geocities.com/mohdddalins/research/html or by emailing the author at
[email protected]
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