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]
“FIAT MONEY & GOLD DINAR APPLICATION: AN ONLINE SURVEY. ”
Hifzur Rab3
Rahmat Nagar, Jhapia,
Bamrauli, Allahabad 211012
India
[email protected]
ABSTRACT5
The former Malaysian Prime Minister, Mahathir Mohamad has suggested the usage of Gold Dinar as an international
Introduction
The Asian currency crisis has affected the South East Asian countries seeing several countries economics
The crisis was promulgated from the currency speculators activities, which led the to the
plunging downward damaging the domestic financial systems, while many companies were financially
distress.
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 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
countries. However, the implementation of gold Dinar seems impossible because of IMF prohibition (Second
payment settlement among OIC countries as one of the solutions to the Asian financial crisis and the unity of the
fraternity uses the fiat money duplicating the conventional system (1991,2002).
for local transactions because it will be used only for international trade settlement.
2
letter of credit as its vehicles. This mechanism is not intended to replace the usage of the domestic currency
settlement. In this mechanism, the participation of central banks and commercial banks are vital using the
Meera Mydin (2002,2004) who also urges the OIC countries to start using gold Dinar for International trade
The idea was supported by academicians and practitioners from all around the world including Ahmad Kamel
to Abdullah Badawi.
countries to adapt the gold Dinar mechanism as the international trade payment settlement before giving way
politicians, business leader and the former Malaysian Prime Minister Mahathir Mohamed. He urged the OIC
monetary system. The revisit of gold Dinar has come into picture and attracted many attentions of economists,
open a new spectrum of rethinking on the existing monetary system in order to find a stable and justice
his decree did not get as many attentions from the Muslims. However, the 1997 Asian financial crisis has
However the majority Islamic scholars or ulama approve the usages of fiat money or paper money therefore
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
1
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.
Keyword: Gold Dinar, Currency
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.
4
The
author is a master scholar at the Faculty of Business & Economics, Universiti Kebangsaan Malaysia.
5
This paper will be presented for InCOMT 2005 Managing Future Workplaces and Issues & Challenges in the Borderless World Sunway Lagoon
Resort Hotel 12-13 July 2005.
system and explain on how the existing financial system could be transformed into an interest free economy
promoting the interest free economy, Tarek el-Diwany introduces the 100 percent gold backed banking
However, scholars also were rethinking to look at the Gold Standard system as one of the alternative. In
(Umar Azmon, 2003 & Abdelhamid Evans 2003).
papers supporting Dinar stressed that the implementation of gold Dinar could be the platform of Islamic unity
minimum level (Nuradli Mohd Dali, Abu Bakar Mohd Yusof, Norhayati Mat Husin, 2002). Consequent
commercial banks as reserve and must be returned to the central bank if not being used in the real economy
real economy transformation. He stressed out that money must be fully utilized and not being kept by the
monetary system Riba-free economy is to be a market driven and least policy-imposed phenomena of money-
problems it creates and suggested some solutions ( 2002). Masudul Alam Chowdhury promotes that a
exploitation of the have nots and its use as unit of account generates massive fraud. He has discussed
small businesses and individual whereas the BPA system is target to the exporters and importers and thus it
implemented and its market segmentation. The electronic payment system such as E-dinar is targeted for
analyzed by Nuradli, Hanifah and Bakhtiar (2003,2004) to find out the most viable system that should be
between the electronic payment system (E-Dinar) and the bilateral payment arrangement system were
purchasing power parity especially for developing countries in the OIC (Jaafar Ahmad, 2003) Comparison
The fiat money is also associated with seignorage as pointed out by Jaafar Ahmad which could reduce its
(Tarek el-Diwany, 2002). Hifzur Rab (1995/1998) has shown that use of fiat money causes massive
(Masudul Alam Chowdhury, 1997).
reserve requirement and a zero excess reserve with the Commercial banks. The Central Bank will back up the
This could reduce the multiple credit creation process goes back to the Central Bank it forms a 100 per cent
(Nuradli Mohd Dali, Hanifah Abdul Hamid, Bakhtiar AlRazi 2003, 2004).
involve and the amount of cooperation among the OIC countries that will involve in the implementation
system is more viable as compare to the electronic payment system due to the volume of trade that will
will have impacts to domestic economies and balance of payment. It has been pointed out that the BPA
residual amount that forms its 100 per cent reserve with gold/silver/other assets of long-term stable value as
pointed out by the researcher that consumers spending have a negative relationship with the amount of gold
amount that gets into 100 percent reserve requirement (Masudul Alam Chowdhury, 1997). In addition, it was
Dinar since it could reduce the exchange rate risk. (Nuradli Mohd Dali, Hanifah Abdul Hamid, Azwari
Dinar as payment settlement and more than 40 percent of the respondents interviewed agreed to use gold
Research was also conducted on the MSC companies to see whether the companies are willing to use the gold
the numeraire choice. In this case, the central bank only need a small amount of gold to back up its residual
needed for backing up the monetary system.
the BPA into Multilateral Payment arrangement which involves more than two countries. (Mohamed Nor
Later on Mohamed Nor Yakcop, presented a paper on the mechanism of gold dinar which was an extension to
Husin 2004 a & b).
elimination of interest from mudharabah and musyarakah financing (Nuradli Mohd Dali and Norhayati Mat
consumerism with focus on reduction of debts, reducing the gaps between the have and the have not, and
Kamaruddin 2003). Furthermore it could promote the economic social order and protect the consumers in
Yakcop, 2002). 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
Theoretical paper using the flexible model with the usage of gold Dinar seeing the impacts of gold dinar in a
Muhammad & Mohd Firdaus Azizan 2004). The economy could not use the domestic monetary expansion
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
policy unless new gold has been discovered or gold currency is being transferred from other countries through
full swing dinar economy making the monetary policy seems impotent. (Nuradli Mohd Dali, Fidlizan
not eliminate the speculative activities entirely since the price of gold or currencies will fluctuate and
4
trading.
3
therefore it will be open to such activities. However, the speculation activities could be reduced to its
Ismail using the Dinar system partially or side by side with the existing fiat money. It was noted that using
However, a previous paper on the same model was also developed by Nuradli Mohd Dali and Abdul Ghaffar
implementation of gold Dinar.
using fiat money and education is also one of the most important factor that need to be stressed out in the
In this research it is expected that the public want to use the gold Dinar as a medium of currency instead of
Hypothesis
this model the currency depreciation is lesser than the flexible model in the event of a domestic monetary
for any countries to use gold as a medium of currency. The Second Amendment to the Articles of Agreement
Even though there are many scholars who wanted for the gold Dinar comeback the IMF regulation prohibits
Furthermore, it is important to see that this area could be incorporated in universities’ curriculum should we
public in order for the country policy formulation if the Dinar is legally accepted for domestic uses.
This research is done to mainly identify the acceptance of gold Dinar as a medium of currency among the
expansion (Nuradli Mohd Dali & Abdul Ghaffar Ismail 2004).
in April 1978 eliminated the use of gold as the common denominator of the post World War II exchange rate
want to implement the system. Since gold Dinar is such a comeback currency, we need more expertise in
Justification of the Research
system and as the basis of the value of the Special Drawing Rights (IMF, 2004).
contribute in opening gold Dinar counters for depositors. This survey could give a picture of the direction of
implementing as well as monitoring this system. Furthermore, the banking and financial institutions could
With the prohibition for the IMF members- therefore it seems impossible for any OIC countries to implement
the market demand in the Malaysian financial system.
2. To evaluate the impacts of demographic profiles on the perception on gold Dinar
Interest seeking and exploitative forces of economic enslavement have established a firm grip over the
Problem with currency is a vital factor in the continuing onslaught of wrong against the right.
February 2005, which is about 4 months. Emails were sent to various e-groups and personal contacts.
The online survey was posted in the Internet from 8th of October 2004 and the cut off period was on the 1st of
Research Scope
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
3. The assessment of prior knowledge and the perception of Gold Dinar.
resources of the world and their control and dominance has been consistently increasing. Growing
1. To analyze the public perception on the implementation of gold Dinar
4. Challenges that have to be encountered in the implementation of gold Dinar.
marginalization of justice and righteousness and accompanying loss of human freedom clearly shows that
unemployment, disparity of income and wealth, poverty and deprivation, fraud and corruption,
The Limitation of the Study
antihuman forces has usurped power and control over the globe and are trying the enslave the human race.
6
his/her country or community. However, most of the fruits of his/her labour get transferred to the slave-
slavery. The slave continues to work efficiently thinking that he/she is working for himself/herself or for
This enslavement differs from enslavement of the bygone era in that the slave may not be aware of his state of
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.
5
interest. Next most important tool is fiat money (its depreciation). Interest and inflation are necessary and
achieved mainly by use of fraudulent economic procedures Foremost among the economic tools being used is
his/her sustenance. This is what constitutes the so-called sustainable society. This, enslavement is being
unviable. All these add to fraud corruption and deception.
to distinguish between right and wrong. Further it makes non-exploitative and interest free modes of finance
and thus, incorporates element of fraud in all our dealings. It confounds truth with falsehood and masses fail
Further since currency is normally used as unit of account, its manipulation corrupts the accounting process
masters through the fraudulent economic procedures leaving for him/her only what is considered essential for
sufficient to ensure dominance of each other. Governments are forced to borrow on interest, to agree to unjust
unity and strength of the country, etc. All these are intended to push the under developed and developing
reducing the worth of the savings of the poor. Inflation allows the prices of the products of the organized
Interest continues to suck the earning and wealth of the poor and transfer it to the rich. Inflation goes on
and exploitative terms of trade and commerce, to follow anti-people policies or the policies that weaken the
countries into the debt trap and then to enslave them.
created by interest-based finance. It follows that interest is a mechanism to enslave the people and any law
below line of poverty has been increasing and many poor countries have already been trapped by the debt
exponential pattern. Clearly debts created by interest-based finance can never be cleared. Number of people
a few years. Naturally things grow and then decay and there is nothing real that can continue to grow in this
this process doubling of dues continues despite the fact that many borrowers are able to repay the loan within
The amount that is returned by previous borrowers is again lent on interest to new borrowers and therefore
years it becomes 140 times and after 100 and 150 years it becomes 19991 and 2826581 times respectively.
continue. Suppose rate of interest is 10.41% then amount payable doubles and redoubles every 7 years. In 50
Amount payable in lieu of interest based finance doubles and redoubles after a period and this redoubling
Exploitation and Fraud are integral parts of the system of interest
interest any economic activity that is not able to produce surplus at a rate higher than rate of interest cannot be
they are not able to provide collateral required for availing interest-based finance. In the economy based on
reducing the proportion of people who own enough resources to employ themselves. As the people get poorer
assured of payment of not only the capital but also the interest. Resultant increase in disparity goes on
produced by the economy, even if the enterprise where the capital is invested make losses the lenders are
get less and overtime it represents a colossal loss. Rich lend capital on interest and usurp most of the surplus
countries export. Thus every time poor country exports something to import something from rich country they
commodities that poor countries export have risen much less than the prices of the finished products that rich
buy something from rich people they get less and overtime it represents a colossal loss. Similarly, prices of
products that organized sector owned by the rich produces. Thus, every time poor people sell something to
prices of commodities that poor people produce and sell have risen much less than the prices of the finished
sector to be increased faster than increase in the prices of the products of the unorganised sector. It is why
that enforces its payment is unjust and inhuman.
process of measurement, reduction in the quantity of wealth expressed by the yardstick of measurement is a
yardstick of measurement of wealth i.e., currency. Considering that manipulation of measure corrupts the
Further since it is not possible for any economy to continue to grow like this, it will have to go on reducing its
unemployment. Further capitalism driven by interest compels labour to accept lower than just wages as labour
mechanism of interest and growing disparity of income and wealth produced by it is responsible for growing
entrepreneur. If the interest rate is higher than the expected return, resources would be unemployed.Clearly
higher than the rate of interest for any business to take off otherwise it will result in a loss for the
run as it results in loss to its owner (entrepreneur). In the interest based economy, expected return must be
clear case of fraud. Considering that wealth is most widely sought after, it is clear that manipulation of its unit
do not have any other alternative to sustain themselves.
8
represents a massive fraud. Considering that the system of interest cannot survive unless currency is
7
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.
oppression. Greedy capitalists are thus using mechanism of interest as a tool to enslave the humanity. Thus,
Economy that allows interest will ever remain full with fraud and corruption, injustice, exploitation and
rupee, ringgit, riyal, euro etc. as well.
it earlier contained. Thus, 10 dollar of today is not same as 10 dollar of yesterday or tomorrow. It applies to
interest can’t coexist with human dignity and freedom and justice. [Freedom is essential, if man is to be held
Real money is a definite quantity of some valuable commodity normally gold and silver, well known to the
Fiat money is complex money; people hardly understand what it is and that allows the rich owners of the
responsible before his lord (god).
Money
organised sector to manipulate market prices to serve their vested interests.
people and that allows the people to participate actively in the process of price determination by the market.
Free people used gold and silver coins as universal medium of exchange and continued to use these for
thereof together with the fact that it is not possible to believe that those who brought these changes were not
welfare. However those who critically analyse the factors that lead to these changes and the consequences
economists record these changes as if these were efforts to develop the economy and to ensure people’s
broken and now we have fiat money that is not linked with any known quantity of wealth. Mainstream
paper money with quantity of gold/silver that was promised. Slowly link with gold and silver was completely
Gradually reserve was reduced and thus, states were in no position honour their promise to exchange the
money backed by gold were as good as gold and silver coins and it was easier to transport and store.
that it represents is reduced.
contained in the basket is reduced. Thus value of currency falls only because quantity of goods and services
and it become cheaper with respect to goods and services only because the quantity of goods and services
cheap only if part of it is removed (uniform quality is assumed). Currency is a basket of goods and services
removed (from the coin). Price of any real commodity is constant with respect to itself and it can become
However, if we consider value of gold coin with respect to gold it can fall only if some part of gold is cut and
cheaper with respect to other goods and secondly part of the gold may be cut off making it smaller in weight.
To understand it more clearly consider a gold coin. Its value can fall for two reasons. Firstly gold may become
thousands of years. Gradually these were replaced by paper money firmly linked to gold and silver. The fiat
aware of the consequences are lead to believe that these changes were part of the most sinister long term
strategically designed plans to enslave the people. Here we shall restrict ourselves to examine how and why
Depreciation of Currency
because people need money to buy their requirements and they are not allowed to use gold or silver coins or
The money we use is the fiat money. It is money only due to fiat (order) issued by government. It has value
Fiat Money
content but that will be clearly understood by people and therefore cannot form basis for massive fraud and
quantity of goods represented by currency. Clearly real currency cannot be depreciated except by reducing its
of clarity, we shall restrict the use of the term, ‘depreciation of currency to this artificial reduction in the
purchasing power of currency and thus currency that is measure of value/wealth become smaller. For the sake
this fiat money is one of the worst antihuman developments in the history of mankind.
any other real money. It is nothing real but it represents goods and services that it can buy. Strictly speaking it
manipulation.
The artificial reduction in the quantity of goods represented by currency leads to corresponding fall in
represents a basket of goods and services and it has same market value as the basket of goods and services it
goods and services that contains different quantity of goods at different times. 50 percent depreciation means
is not the same as the fiat money of a year or more or less earlier or latter because it represents basket of
10
supply almost without limit. Further the banks that are a vital part of the system of interest create more than
of a thousand ringgit note is much less than a tenth of a ringgit. Therefore government can increase money
Compared to market value the cost of production of fiat money is almost nil. For example cost of production
represents. Thus, in reality fiat money is a basket of goods and services that it represents. Fiat money of today
9
the quantity of goods and services contained in the basket is reduced to half the quantity of goods and services
history of the human race while real money is a very important facilitator of justice.
these two types of money. Due to these differences fiat money is the worst antihuman innovation in the
shares and therefore each share i.e., currency becomes halved. These are the important differences between
out put is divided. Currency is equal to one share. To double the supply of money is to double the number of
case of fiat money. As a matter of fact total supply of money represent the number of shares in that national
prohibitive cost. However, it is to be noted that it is improper and misleading to talk of supply and demand in
90% of money supply almost free of cost. Supply of real money cannot be manipulated freely and it involves
yardstick of measurement or scale that is used to measure wealth. It is therefore a grave crime a clear case of
feel that prices are rising. They are deceived. Thus depreciation of currency amount to a reduction in the
of currency. Thus, currency is depreciated and people who do not understand the under lying fraud wrongly
wealth. There is no change in price level and apparent increase in prices is an illusion created by depreciation
there is no change in price. Similarly depreciation of currency is a case of change of scale of measurement of
there in no real change in price, commodities will seem to sell at half their previous prices although in reality
changed). The weight of various goods will seem to become double their previous weight. Assuming that
Suppose gold is the only commodity that is traded in a country. X is its currency. Let the total quantity of gold
A simplified view of depreciation:
depreciation of currency.
when the supply of fiat money is increased, the quantity of goods and services it represent falls and it is the
number of shares every month the measure of mass will continue to become smaller every month. Similarly
head of state and such a share is used as measure of mass/weight. Now if the head goes on increasing the
To understand this, suppose that in a country a store full of rice is divided in number of shares ordained by its
responsible for the massive, social, political and moral problems that are driving our civilization to the brink
however; fiat money can be depreciated without limit. Clearly, system of interest as well as fiat money are
System of interest cannot exist unless currency is depreciated. It is not possible to depreciate real money
environment.
free from interest. Masses can hardly understand what is just and what is unjust in such a fraudulent
what is normally considered to be involving interest may be nearer to justice than what is considered to be
cleared for six years is what justice demands and not paying double is injustice. Clearly in such a scenario
Clearly, in the scenario considered above insisting on receiving double the amount lent if the dues are not
fraud. Clearly a reduction of measure has to be compensated by ensuring equality of quantity in real terms.
that was traded today be 100,000 gm. and assume that it was traded for 100,000 X. Clearly today X represents
of its annihilation. We have briefly discussed some of these aspects and now we will consider some others.
How Currency Depreciates? An Illustration:
exactly one gm. of gold. Now suppose that after 6 years 200,000gm.of gold is traded for 400,000X. Clearly
to the reduction in the quantity of gold that it represented. Since within said 6 years the quantity represented
represented to exactly half within the said 6 years. Clearly in this case depreciation of currency is equivalent
depreciation of currency means. In this case depreciation of currency has reduced the quantity of gold that X
email linking it to a website. With the advance of ICT, the authors managed to get 436 respondents to answer
Dinar. The information was obtained from structured questionnaire, which was sent to respondents through
The survey contains questions with aims to get the respondents’ point of views on certain issues on gold
Research Methodology
then X will represent half a gm of gold i.e., exactly half the quantity it is representing today. This is what the
had been reduced to half, a loan of 10 X of today will be equivalent to a loan of 20 X of 6 years latter and a
the questionnaires.
12
capital of 10 X of today will be equivalent to a capital of 20 X of 6 years latter.
A kg is same as a thousand gm. Suppose, that the government orders that from tomorrow kg will equal 500
11
gm only. Following adaptation of the said kg (note that in this case the yard stick of measurement of wealth is
Figure 1: Research Framework: Public Perception of Gold Dinar Acceptance
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
1.00 – 1.80
Mean score
Disagree
Strongly disagree
Interpretation
Knowledge on
Gold Dinar
1.81 – 2.60
Unsure
tabulated as below:
Results and Findings
2.61 – 3.40
Agree
General Perception of Gold Dinar
Function of Money
The Uses As Currency
Gold Prevent Exchange Rate Risk
Gold Increase Trade
Gold economy need knowledge
Payments By Gold Dinar
Conversion of Gold Dinar to Other Currencies
Demographic Profiles of the respondents
3.41 – 4.20
Strongly agree
influence
Approximately 65.1 percent of the respondents are male and the remaining 34.9 percent are female
4.21 – 5.00
Acceptance of
Gold Dinar
respondents from a total of respondents of 436 people (Table 1a, Appendix 1). Majority of the respondents
60.6 percent of the respondents’ country origin is Malaysia, followed by Indonesia 12.8 percent, United States
1c, Appendix 1).
have postgraduate degree and the remaining 3.9 percent have school, primary and secondary education (Table
respondents’ education background shows that 54.4 percent have university education while 41.7 percent
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
With the implementation of gold Dinar, there will be a substantial increase of trade
could prevent the exchange rate risk associated with the paper money
goods and services are acceptable
Questions
3.45
3.86
The uses of universal currency Gold Dinar as a medium of exchange for payments of 3.94
The function of Gold Dinar is as the same as the fiat money or paper money
4.18
3.06
Agree
Agree
Agree
Agree
Unsure
Mean Interpretation
fall into between 29 to 35 years old, which consist 31.9 percent from the total respondents followed by 19 to
of America 4.4 percent, United Kingdom and Pakistan 3.4 percent and the remaining 30.8 percent come from
Knowledge is vital for the implementation of gold Dinar in the business community
Unsure
14
currencies. However, they are in the opinion that the uses of gold Dinar are acceptable and it will reduce
fiat money, the acceptability of others towards Gold Dinar and the convertibility of the gold Dinar to other
The results show that many respondents were unsure whether the Gold Dinar could function as the same as
currencies
I am afraid that I cannot convert the gold currency to my own currency or other
If gold is being used as a medium of exchange in the electronic payment system. It
various countries from around the world (Table 1d, Appendix 1). The distribution of the respondents job
I am afraid that the other parties will not pay me/us using the proposed Dinar system 3.15
Unsure
position comprises 21.3 percent are executive, 20.9 percent are academician and college/university students
2.82
evenly. The remaining 40 percent comprises from variety of positions from home-makers 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).
13
in implementing the system.
exchange rate risk. Furthermore, the implementation of Gold Dinar will increase trade, and education is vital
age (-0.101) at 99% significant level, level of education (-0.099) at 99% significant level and country of
The perception of public towards the acceptability of others to use Dinar has weak negative relationship for
Findings 2:
impact on the perception whether the other parties would use the same gold Dinar for transaction.
significant level. Thus these results show that all the demographic profiles of the respondents could have an
origin (-0170) at 95% significant level except for gender with a weak positive relationship (0.148) at 95%
Impacts of demographic profiles on the perception on gold Dinar
respondents and the perception of gold Dinar, it was found that acceptability of gold Dinar has a negative
country of origin (-0.195) have a mix weak relationship with the perception of convertibility of gold Dinar to
All four demographic gender profiles such as gender (0.203), age (-0.208), level of education (-0.185), and
Based on the Spearman’s Rho correlation (Table 3, Appendix 3) conducted on the demographic profiles of the
relationship with gender (-0.210) at 95% confidence level, weak positive relationship with age (0.163) at 95%
other currencies at 95 percent confidence level.
Overall, the demographic profiles of the respondents could have an impact to the perception on gold Dinar
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.
weak positive relationship with age (0.133) and level of education (0.171) at 95 percent confidence level.
The assessment of Anova on prior knowledge and the perception of Gold Dinar.
Findings 3:
except for the function of gold Dinar is the same as fiat money which is not significant.
Overall age and level of education could have an impact to the perception whether gold Dinar could prevent
Based on the Anova results it is noted that prior knowledge on the Gold Dinar could influence the public
The prevention of exchange rate risk associated with paper in the implementation of gold Dinar also has a
exchange rate risk.
of origin could have an impact to the perception of whether the gold Dinar could promote trade among
could increase trade with a weak negative relationship of (-0.087) at 99% significant level. Therefore country
Only country of origin has an impact on the perception of whether with the implementation of gold dinar
significant different for the function of gold is as the same as paper money, Increase of trade in the
levels are below than 0.05. However, for the other three perceptions, prior knowledge does not have a
community (.001), and the convertible of the gold currency to other currencies (.016) since the significant
exchange rate risk (.000), the importance of knowledge for the implementation of gold Dinar in the business
perception on the uses of universal currency Gold Dinar as a medium of exchange (Sig. .000), reduction of the
countries, business and individuals.
Findings 4:
implementation of Gold Dinar and the acceptance of others to use gold Dinar.
level of education have a weak positive relationship (0.160) and (0.100) at 95% and 99% percent respectively.
Challenges that have to be encountered in the implementation of gold Dinar.
With regards to the perception of the importance of knowledge in implementing the gold Dinar only age and
These results shows that age and education level could have an impact to the demand for formal knowledge in
16
Survey results, which show the obstacles and hindrances that the respondents might face in the
implementation of gold Dinar ranked as follows:
1. The willingness of other to accept gold Dinar
36.9 percent
implementing gold Dinar.
15
6. Security issues
5. Gold quality assurance
4. Scarcity of Gold
3. Lack of Will Power
2. Comfortable with Euro, Dollar and other currency
3.4 percent
6.0 percent
8.3 percent
13.3 percent
13.3 percent
18.8 percent
money. One needs to make some great innovations towards the using of gold dinar. Then we could see the
medium of exchange, especially using gold dinar as a function of payment transaction that replace the fiat
and logic. This finding is reflected by the real example that no countries nowadays are using gold dinar as a
uncertainty of many respondents whether the gold dinar could function as money even though it is acceptable
There are some discussions that need further exploration according to the finding results. Firstly, the
Discussion
management.
18
should incorporate gold dinar as one the integral subjects in economics, finance, accounting and business
knowledge warehouse play a major role in educating our next generation. The universities’ curriculum
education, will have positive perception about this system, thus will create balance situation. Universities as a
needs to be done before we could further implement gold dinar. Public whom equipped with well gold dinar
government needs to rebalance the system by ‘reintroducing’ the gold dinar system. This is the first step that
system has gone too far now. Most people seem to have a better understanding about this system. The
Secondly, the implementation of Gold dinar depends on the knowledge and level of educations. The interest
willingness of the government to build the innovations towards a better economic condition.
could remove the uncertainty. Again it is pointed out that the use of gold dinar is depending on the
The main related issue of gold dinar however, lies in whether the use of gold dinar as a medium of exchange
the government to further decides whether or not to use gold dinar instead of fiat money.
dinar will reduce exchange rate risk. The implementation of gold dinar will increase a trade. It is the role of
Nevertheless, many respondents seem to agree that the uses of gold dinar are acceptable and the usage of gold
implement gold dinar to replace fiat money functions.
performance of gold dinar compared to fiat money. This will then enhance the public confidence to
7. Fraud
From the result is found that the respondents are skeptical about the willingness of other 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 also 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 (Table 5, Appendix 5).
17
knowledge about gold dinar.
begin to aware the willingness of government about this system. This will leads to a better perception and
once gold dinar is widely used. If the government takes action to introduce the gold dinar, then people will
The government could then setup gold dinar side by side with fiat money and eventually replace fiat money
Amir Hassan, Umar Azmon. Dynamics of The Dinar And Its Inevitable Return. Proc. of the International
Ahamed Kameel Mydin Meera. The Theft of Nations. Returning to Gold. Pelanduk 2004.
Ahamed Kameel Mydin Meera. The Islamic Gold Dinar. Pelanduk 2002
REFERENCE
Convention on Gold Dinar as An Alternative International Currency. July 1, 2003 Putra World Trade
Evans, Abdalhamid. The Gold Dinar - A Platform For Unity. Proc. of the International Convention on Gold
Centre, Kuala Lumpur.
accept gold dinar. It is the fact that with fiat money the government could increase money supply almost
Dinar as An Alternative International Currency. July 1, 2003 Putra World Trade Centre, Kuala
Thirdly, the issue about the scarcity of gold remains low compared to the issue of the willingness of others to
without limit but not with gold dinar system. Again, the issue remains on the willingness of the government or
Lumpur.
Hifzur Rab (2002) ‘Problems created by fiat money gold Dinar and other alternatives’ Meera,A.K.Mydin
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.
ed,(2002), International Conference on Stable and Just Global Monetary System., IIUM, Kuala
Mohamed Nor Yakcop. The Role Of Central Banks In The Implementation Of The Gold Dinar Proposal.
Lumpur
certain conditions to be expected by the agent of economics. Better expectations that lead to a better
International Seminar of "Gold Dinar In Multilateral Trades" organized by Institute of Islamic
Finally, we already know that gold has a low volatile price compared to the currency. This will lead to a
productivity and efficiency. The remain issue is not about injustice, poverty or the economic issue such as
Understanding Malaysia. 22-23 Oct 2002.
Standard:
Theory,
Universiti Tenaga Nasional. 2003
Fact
And
Policy
Available
Nuradli Ridzwan Shah Mohd Dali at el. “The Level of Acceptance on the Implementation of Gold Dinar
Within MSC Companies”. Proceeding of Student Conference on Research and Development.
Universiti Tenaga Nasional, 2003.
at
20
Electronic Payment System. Proceeding of Student Conference on Research and Development.
Nuradli Ridzwan Shah Mohd Dali at el. Gold Dinar. Using Bilateral Payment Arrangement System or
1997.
Masudul Alam Chowdhury. Money In Islam.: A Study in Islamic Political Economy, London, Routledge,
http://faculty.uccb.ns.ca/mchoudhu/money.htm
Gold
Masudul Alam Chowdhury. A Monetary System With 100-Per Cent Reserve Requirement And The
inflation, uncertainty, unemployment rather than the issue about 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). Also we need to explore the perception of
economist about this issue.
19
Nuradli Ridzwan Shah Mohd Dali at el. The Implementation of Gold Dinar. Is It The End of Speculative
Measures? Journal of Economic Cooperation SESTRCIC, Ankara Turkey. July 2002.
Nuradli Ridzwan Shah Mohd Dali at el. The Mechanism of Gold Dinar. AS Nordeen 2004.
Nuradli Ridzwan Shah Mohd Dali at el. Islamic E-Commerce. Its Theoretical Framework and challenges For
Islamic Business. Proceeding of Knowledge Management of International Conference & Exhibition
(KMICE) 14-15 February 2004. Evergreen Laurel Hotel, Penang & Covention Center, UUM
Malaysia.
Nuradli Ridzwan Shah Mohd Dali & Norhayati Mat Husin. Gold Dinar: The Impacts On The Economic
Social Order. Procc of the Colloquium on Economic and Business Issues” organized by Faculty of
Business Management University Technology Mara on 18th May 2004, Annexe Dewan Sri Budiman
University Technology Mara, Shah Alam, Malaysia
Nuradli Ridzwan Shah Mohd Dali & Norhayati Mat Husin. Gold Dinar. The Impacts On Consumerism
Towards Creating A New Islamic Economy Procc of the Second Economics Colloquium Organized
by Department of Economics University of Technology Mara, Johor Branch on 24 Mei 2004 at
Golden Legacy Hotel, Malacca
Rais Umar Ibrahim Vadillo. The End of Economics. Madinah Press. Granada 1991.
Rais Umar Ibrahim Vadillo. The Return of The Islamic Gold Dinar. New Edition, Madinah Press 2002.
Tarek El Diwany. The Problem With Interest. TA-HA Publishers UK1997
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]
21
Frequency
152
284
436
Gender
Percent
34.9
65.1
100.0
Age
Percent
7.8
18.8
17.2
31.9
13.5
10.8
100.0
Valid Percent
7.8
18.8
17.2
31.9
13.5
10.8
100.0
Valid Percent
34.9
65.1
100.0
Table 1a: Descriptive Statistics - Gender
Valid
Female
Male
Total
Frequency
34
82
75
139
59
47
436
Table 1b: Descriptive Statistics - Age
Valid
15 - 18
19 - 23
24 - 28
29 - 35
36 - 42
Above 42
Total
Frequency
10
182
1
6
237
436
Education
Percent
2.3
41.7
.2
1.4
54.4
100.0
Valid Percent
2.3
41.7
.2
1.4
54.4
100.0
Table 1c: Descriptive Statistics - Education
Valid
High Sch
Postgrad
Primary
Secondar
Universi
Total
Cumulative
Percent
34.9
100.0
Cumulative
Percent
7.8
26.6
43.8
75.7
89.2
100.0
Cumulative
Percent
2.3
44.0
44.3
45.6
100.0
Appendix 1
22
Frequency
2
5
4
1
1
1
2
1
1
12
56
1
2
1
264
1
18
15
2
1
1
5
1
1
3
15
19
436
Country
Percent
.5
1.1
.9
.2
.2
.2
.5
.2
.2
2.8
12.8
.2
.5
.2
60.6
.2
4.1
3.4
.5
.2
.2
1.1
.2
.2
.7
3.4
4.4
100.0
Valid Percent
.5
1.1
.9
.2
.2
.2
.5
.2
.2
2.8
12.8
.2
.5
.2
60.6
.2
4.1
3.4
.5
.2
.2
1.1
.2
.2
.7
3.4
4.4
100.0
Table 1d: Descriptive Statistics - Country
Valid
Argentin
Australi
Canada
Egypt
Finland
France
Germany
Greece
Hungary
India
Indonesi
Ireland
Italy
Japan
Malaysia
Netherla
Other
Pakistan
Philippi
Russia
Saudi Ar
Singapor
South Af
Turkey
United A
United K
United S
Total
Cumulative
Percent
.5
1.6
2.5
2.8
3.0
3.2
3.7
3.9
4.1
6.9
19.7
20.0
20.4
20.6
81.2
81.4
85.6
89.0
89.4
89.7
89.9
91.1
91.3
91.5
92.2
95.6
100.0
23
Frequency
91
7
91
18
93
2
21
27
13
33
2
11
11
13
3
436
Job
Percent
20.9
1.6
20.9
4.1
21.3
.5
4.8
6.2
3.0
7.6
.5
2.5
2.5
3.0
.7
100.0
Valid Percent
20.9
1.6
20.9
4.1
21.3
.5
4.8
6.2
3.0
7.6
.5
2.5
2.5
3.0
.7
100.0
Table 1e: Descriptive Statistics – Job Position
Valid
Academic
Clerical
College/
Computer
Executiv
Homemake
K-12 Stu
Other
Other Te
Professi
Retired
Sales/Ma
Self-emp
Service/
Unemploy
Total
Cumulative
Percent
20.9
22.5
43.3
47.5
68.8
69.3
74.1
80.3
83.3
90.8
91.3
93.8
96.3
99.3
100.0
24
Minimum
Statistic
Maximum
Statistic
Mean
Statistic
Std.
Deviation
Statistic
Descriptive Statistics
N
Statistic
1.19582
1.08565
1.01561
1.01512
1.11671
1.07070
1.37649
2.8211
3.1537
4.1812
3.4587
3.8601
3.9450
3.0642
5.00
5.00
5.00
5.00
5.00
5.00
5.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
436
436
436
436
436
436
436
436
Table 2: Descriptive Statistics
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
Valid N (listwise)
Appendix 2
.117
.117
.117
.117
.117
.117
.117
Skewness
Statistic
Std. Error
-.121
-.940
-.826
-.364
-1.375
-.211
.057
25
Correlations
Appendix 3
-0.05052
424
0.861723
-0.00848
Country
-0.06945
424
0.299372
Education
0.06375
424
0.15339
Age
436
424
0.017983
0.115*
424
0.001286
0.156**
424
0.000773
0.163**
436
436
0.822715
-0.06934
424
0.006007
0.842762
0.009662 -0.097*
424
0.000393
424
0.045054
424
0.223529
0.059235
0.037845
0.154069
0.171**
0.430556
0.039012
424
0.659284
-0.02147
424
0.000929
0.100*
424
0.83981
424
0.000451
-0.170**
424
0.041111
-0.099*
424
0.038154
-0.101*
0.001928
424
5.19E-05
-0.195**
424
424
0.000124
-0.185**
424
424
0.008142
-0.128**
436
1.98E-05
0.203**
436
0.148**
436
-0.00971 0.160**
436
-0.01076 0.133**
9.33E-06
-0.210**
0.18396
Gender
Table 3: Spearman Rho’s Correlation Between the Demographic Profiles and Perceptions.
Spearman's rho
The function of Gold Dinar is as the same as the
Correlation Coefficient
fiat money or paper money
Sig. (2-tailed)
N
The uses of universal currency Gold Dinar as a
medium of exchange for payments of goods and
Correlation Coefficient
services are acceptable
Sig. (2-tailed)
N
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
Correlation Coefficient
Sig. (2-tailed)
N
With the implementation of gold Dinar, there will
be a substantial increase of trade
Correlation Coefficient
Sig. (2-tailed)
Correlation Coefficient
N
Sig. (2-tailed)
N
Knowledge is vital for the implementation of gold
dinar in the business community
Correlation Coefficient
I am afraid that the other parties will not pay
me/us using the proposed Dinar system
Sig. (2-tailed)
N
I am afraid that I cannot convert the gold currency
Correlation Coefficient
to my own currency or other currencies
Sig. (2-tailed)
N
*Correlation is significant at the 0.01 level (2-tailed).
**Correlation is significant at the 0.05 level (2-tailed).
26
ANOVA
1
434
df
824.099
1
435
Sum of
Squares
.103
Within Groups
29.950
824.202
Between Groups
Within Groups
.103
Mean Square
1.899
29.950
512.515
.190
448.686
437.695
10.991
448.257
447.107
1.150
542.466
527.002
15.464
498.679
1
435
434
1
435
434
1
435
434
1
435
434
1
435
1.414
8.257
1.181
.190
1.009
10.991
1.030
1.150
1.214
15.464
1.080
Within Groups
512.704
434
434
Total
8.257
435
Total
Within Groups
613.789
Total
Within Groups
Between Groups
Between Groups
Between Groups
Total
Within Groups
Between Groups
Total
Within Groups
Between Groups
Total
622.046
468.729
Total
Between Groups
.816
Sig.
Appendix 4
.054
.000
.160
10.898
1.117
.016
.689
.001
.291
.000
5.838
12.735
27.731
F
The Assessment of Anova on Prior Knowledge and the perception of Gold Dinar.
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
27
Valid
Appendix 5
Table 5: Challenges that have to be encountered in the usage of gold Dinar.
is the major hindrance of implementing the gold Dinar as a medium of exchange?
3.4
8.3
3.4
57.1
43.8
30.5
22.2
18.8
15
8.3
13.3
63.1
Cumulative
Percent
36
13.3
6.0
13.3
18.8
58
6.0
13.3
100.0
Valid Percent
58
36.9
18.8
26
36.9
100.0
Percent
Comfortable
with Euro,
Dollar and other
Fraud
161
100.0
82
Gold quality
assurance
Lack of Will
Power
Scarcity of Gold
436
Frequency
Security
purposes
The willingness
of others to
accept gold
Total
28