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Page added on June 8, 2015
Islamic State to Issue Its Own Currency
They have paraded their own flag, formed courts and ministries, issued passports and even license plates. Now, the leaders of the Islamic State, the violent jihadist group that has seized parts of Syria and Iraq, have created their own currency, part of a grandiose plan to restore the caliphate era that dominated the Middle East more than 1,300 years ago.
In an announcement on Thursday heralding a liberation from the “satanic usury-based global economic system,” the Islamic State said it would begin minting gold, silver and copper coins, in likenesses similar to the days of the seventh-century caliphs.
The coins will have standardized weights and values, the announcement said, and they will be the legal tender of the lands controlled by the group, also known as ISIS or ISIL.
Important details such as the timing of when the coins would begin to circulate, and how they would be minted, were not disclosed, and a question remained: Can the group really create a viable currency?
Many money historians and other experts said no, describing the announcement as a propaganda exercise, meant largely to reinforce the Islamic State’s self-anointed legitimacy.
They said practical problems could doom the currency, notably its stigma elsewhere, severely limiting its use for money’s basic purposes of buying and selling goods and services.
“What central bank is going to accept an ISIS coin?” said David L. Phillips, a former adviser at the United Nations and the State Department, now at Columbia University’s Institute for the Study of Human Rights.
“It’s like blood diamonds,” he said. “No credible financial institution is going to take this.”
Some questioned how the Islamic State, even with its profits from oil smuggling, hostage ransoming and stealing, could accrue enough gold and silver to produce coins for mass circulation. Others said the minting of such coins, in what is essentially a war zone, could also be problematic.
Even more puzzling, some said, is the Islamic State’s assertion that the coins would be unaffected by movements in the dollar and other prevailing world currencies. The value of gold often moves in the opposite direction of the dollar, which lately has been rising.
“Of course this is nonsensical,” said Steve H. Hanke, a currency expert at Johns Hopkins University. The purchasing power of gold, he said, “is determined in the world market and has nothing to do with ISIL.”
Some economists said there could be something to the Islamic State’s aspiration to use gold for money, seeing it as a potential venue for smuggling and thievery.
They noted that since charging interest is forbidden under strict interpretations of Islamic law, gold as a non-interest-bearing investment could be an ideal way for more strict Muslims to transact business and amass wealth.
Even with its ups and downs, gold has long been treasured for its retention of value and its universal recognition as a so-called safe haven alternative to paper money, especially in times of uncertainty. The world’s major central banks all maintain large stockpiles of bullion.
In the history of money, coins of gold and other precious metals, which first circulated around 500 BC, predate the introduction of paper currency by roughly 1,300 years.
“There’s not a place in the world that won’t take gold,” said James G. Rickards, a lawyer, economist, financial commentator and author of “The Death of Money: The Coming Collapse of the International Monetary System,” an explanatory book about the stresses accumulating in the system, especially since the 2008 financial crisis.
Rickards said groups like the Islamic State, excluded from conventional banking methods, are known to use bitcoin and other crypto-currencies to transfer wealth across borders. Their other way, he said, is gold.
“We’ve always talked about gold as part of the threat matrix,” he said. “It’s not surprising to see this.”
Hanke said the more important element of the Islamic State’s currency was its symbolism.
“They’re producing money,” he said. “Money is produced by states. So this gives this outfit the patina of being a state.”
25 Comments on "Islamic State to Issue Its Own Currency"
BobInget on Mon, 8th Jun 2015 9:46 am
South African Krugerrand Gold Coins minted back in the sixties, were sold over the counter.
All gold bugs need to know, is there is really the exact amount of gold specified. No one will trust
IS minted coin. While South African gold is mined, Islamic gold was stolen from various banks and wealthy individuals, Nazi style.
Perk Earl on Mon, 8th Jun 2015 9:58 am
“…part of a grandiose plan to restore the caliphate era that dominated the Middle East more than 1,300 years ago.”
It’s not bad enough the ME psychologically exists in the distant past, it now is endeavoring to time-travel back 1,300 years?
Maybe they should go back to teaching Aristotle’s calendar that had numerous excuses to keep the Earth at the center of the universe, no matter how other planets in our solar system or the stars changed position.
joe on Mon, 8th Jun 2015 10:31 am
Makes sense for them to say non sense like this. If they plan to take over the earth using an economy modeled on ancient roman imperial gold standards then good luck to them, they are gonna need it.
How many solid gold denars (Latin denarii) will buy a tank in Damascus or rpgs smuggled from Russia. If the smugglers hear that ISIS really are paying gold then their costs will shoot up. More lies from the Islamic state of lies butchers of weak people.
GregT on Mon, 8th Jun 2015 10:43 am
We’re all going to be time travelling back 1300 years guys. Western capitalism has almost runs it’s course, and all of us will be paying the consequences.
Don’t get me wrong, I love my current lifestyle as much as anybody else, but it was never sustainable.
GregT on Mon, 8th Jun 2015 10:55 am
Bob,
Much of the gold in the world has been stolen over the centuries, by central banks, sovereign nations, and wealthy individuals. Some of that gold has been stolen multiple times.
Plantagenet on Mon, 8th Jun 2015 11:02 am
1. The Islamic State is a state. Of course they are going to have their own currency.
2. While the model for the Islamic State comes from the teachings of Muhammad and the example of the early Moslems 1300+ years ago, the most recent Caliphate was the Turkish Empire—-and it only collapsed about a century ago.
GregT on Mon, 8th Jun 2015 12:20 pm
1. The Islamic State is not a state.
“The self-proclaimed Islamic State is a militant movement that has conquered territory in western Iraq and eastern Syria, where it has made a bid to establish a state in territories that encompass some six and a half million residents.” http://www.cfr.org/iraq/islamic-state/p14811
2. “The very term, ‘Islamic State’, was never used in the theory or practice of Muslim political science, before the twentieth century,” according to Pakistani scholar of Islamic history Qamaruddin Khan.[3][4]
The modern conceptualization of the “Islamic state” is attributed to Abul A’la Maududi (1903–1979), a Pakistani Muslim theologian who founded the political party Jamaat-e-Islami and inspired other Islamic revolutionaries such as Ayatollah Ruhollah Khomeini.[5] Abul A’la Maududi’s early political career was influenced greatly by anti-colonial agitation in India, especially after the tumultuous abolition of the Ottoman Caliphate in 1924 stoked anti-British sentiment.[6]
The Islamic state was perceived as a “third way” between the rival political systems of democracy and socialism (see also Islamic Modernism).[7] Maududi’s seminal writings on Islamic economics argued as early as 1941 against free-market capitalism and socialist state intervention in the economy, similar to Mohammad Baqir al-Sadr’s later Our Economics written in 1961. Maududi envisioned the ideal Islamic state as combining the democratic principles of electoral politics with the socialist principles of concern for the poor.[8]
http://en.wikipedia.org/wiki/Islamic_state
Plantagenet on Mon, 8th Jun 2015 12:44 pm
If the Council on Foreign Relations says the Isalmic State isn’t a state, then there is a disagreement between the adherents of the Islamic state and the CFR.
So who is right?
The CFRs statements don’t actually change the facts on the ground, i.e. the Islamic State has a flag, a government, territory, courts, an army, an air force, tax collection, and all the attributes of a state. They even have a national currency.
GregT on Mon, 8th Jun 2015 1:05 pm
What criteria must the caliphate of the Islamic State meet in order to be considered a State under international law?
The most accepted requirements for determining the existence of a State in international law—the criteria stipulated in the 1933 Montevideo Convention on the Rights and Duties of States. The four criteria of this Convention are: a) a permanent population, b) a defined territory, c) an effective government, and d) a capacity to enter into relations with other States.
http://en.idi.org.il/analysis/articles/isis-is-the-islamic-state-really-a-state/
Plantagenet on Mon, 8th Jun 2015 1:56 pm
OK—so the Islamic State has a territory and a population, and they have a government (they even have a Caliph). So 3 out of 4 criteria set by the Montevideo Convention have been met.
That leaves one more crieria to be met.
Does the Islamic State have the capacity to enter into “relations” with other states? Considering the US, Iraq, Iran, Syria, Jordan etc. are at war with the Islamic State and the Islamic State has in turn declared war on these countries, they do indeed have a kind of “relations” with other countries. It even has friendly relations with a few states—-Turkey does business with them and they claim Pakistan is gong to sell them nukes. Even the USA has trained and supplied some Syrian fighters who wound up fighting for IS. The Islamic state also has business relations outside their state, including the internet, banking, oil sales to Turkey and others, and weapons purchases etc from Pakistan, etc..
The Islamic State is a miserable excuse for a state, but they do indeed have the four attributes of a state as set forth in the Montevideo Convention of 1933..
apneaman on Mon, 8th Jun 2015 2:06 pm
Plant, as an American your the last person who should be deciding if the requirements of international law and agreements are being met. No one has any faith in the US anymore including her allies – crisis of legitimacy they call it – at home and abroad.
GregT on Mon, 8th Jun 2015 2:25 pm
Islamic “state” does not have:
a: a permanent population
b: a defined territory
c: an effective government
d: a capacity to enter into relations with other states. ( other than war, which I am sure was not the kind of relations that the Montevideo Convention envisioned)
Stop playing the class idiot planter.
KingM on Mon, 8th Jun 2015 3:08 pm
Forget practicalities, imagine if they did have enough gold to mint, and a functioning economy. That gold would migrate out of the state almost the instant it was minted. ISIS produces nothing, it is only a consumer.
apneaman on Mon, 8th Jun 2015 3:14 pm
Syria: Isis Executes 3 Pigeons on ‘Spying’ Charges
http://www.ibtimes.co.in/syria-isis-executes-3-pigeons-spying-charges-635074
GregT on Mon, 8th Jun 2015 3:55 pm
It’s getting harder to determine which news sources are realistic, or satirical.
GregT on Mon, 8th Jun 2015 4:03 pm
I mean really, “banning pigeon breeding claiming the sight of the birds’ genitals as they fly overhead is sinful according to Islam.”
Pigeons don’t even have genitals, they can only be sexed through DNA, a laparoscopy, or whether or not they lay eggs.
Honestly, who makes this stuff up?
Plantagenet on Mon, 8th Jun 2015 4:14 pm
@grgor
Your idiotic claim that IS doesn’t have any territory or government or population is almost as stupid as your claim that the world isn’t in an oil glut.
Cheers!
GregT on Mon, 8th Jun 2015 4:38 pm
You’re digging yourself deeper into another hole of endless stupidity planter, just saying.
Plantagenet on Mon, 8th Jun 2015 6:13 pm
@grgr
You’re the fool who claims IS doesn’t have any territory.
Do you live in a cave or what? Have you never heard of Syria? How about Iraq? How about Libya? Yemen?
IS controls huge hunks of territory in Iraq and Syria, and now Islamists splinter groups in other countries are swearing allegiance to the Caliph in Syria.
GregT on Mon, 8th Jun 2015 7:33 pm
Syria, Iraq, Libya, and Yemen, are all sovereign states planter. They all have governments, and they all meet the requirements laid out in the Montevideo Convention.
You are doing nothing more than make yourself look foolish, and that is all you are accomplishing. As you were. Keep digging your hole.
roman on Mon, 8th Jun 2015 8:03 pm
Booty is their export. If you have enough men and weapons it’s the easiest way to grow the economy short term. Gold is considered money. It doesn’t matter who mints it. Just melt it down or use a hammer.
HARM on Mon, 8th Jun 2015 8:04 pm
“the Islamic State said it would begin minting gold, silver and copper coins…. The coins will have standardized weights and values”
Wow, so ISIS is rejecting fiat money and issuing sound currency. The libertarians (especially the uber-goldbugs) will love this.
GregT on Mon, 8th Jun 2015 8:23 pm
There are many reasons that the IS is gaining popularity in the ME Harm.
Aire on Mon, 8th Jun 2015 9:46 pm
I would meet in between the lines of calling this new uprising a “state” or not. Personally, I consider it a guerrilla state. I just made that up.
joe on Tue, 9th Jun 2015 11:07 am
It’s concept of itself as a state is non sense since every ‘muslim’ takes an oath of aligence to the caliph personally they are more like pirates who agree a common code of practice with loyalty only to one man as long as he enforces the code. IS is more like a modern capitalist company in that case as well.