The prospect of gold dinar as a currency: Physical or gold backed?

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Abstract

The call to make gold dinar as a currency first arises when the current financial system shows various weaknesses so much so causing the global economics crises in the early 21st century. However, there are two different approaches to dignify the reuse of gold dinar either in the form of physical gold dinar (PGD) as a currency or in the form of value backed by gold (BGD). Thus, the aim of this study is to analyze the prospect of using gold dinar as a currency to suit the current economy. This study is in qualitative form using the literature review approach while the analyzed data is based on monetary theory assessment. The four monetary theories used are the currency theory (the currency concept and function), the money supply and demand theory (optimal supply of money/optimum quantity of money), the Gresham's Law of "Bad Money Drive Out Good Money" and the Optimum Currency Area (OCA) theory. This study shows that the use of physical gold dinar as a currency is not practical to be implemented in the current economy because it contradicts with almost all the analyzed monetary theories. Meanwhile, the use of gold dinar as value backed illustrates lesser problems of disequilibrium of gold supply and demand and does not fulfill certain characteristics of money from the aspects of immunity and durability. Thus, this study finds that the mechanism prospect of gold dinar as a gold backed currency system (BGD) is more suitable to be implemented in the current economy as compared to physical gold dinar based (PGD) system.

Original languageEnglish
Pages (from-to)33-46
Number of pages14
JournalEnergy Education Science and Technology Part B: Social and Educational Studies
Volume6
Issue number1
Publication statusPublished - 2014

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gold
currency
monetary theory
money
economy
demand theory
supply
money supply
financial system
immunity
economic crisis
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Keywords

  • Currency
  • Gold backed system
  • Gold dinar
  • Gold money
  • Monetary system

ASJC Scopus subject areas

  • Education

Cite this

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title = "The prospect of gold dinar as a currency: Physical or gold backed?",
abstract = "The call to make gold dinar as a currency first arises when the current financial system shows various weaknesses so much so causing the global economics crises in the early 21st century. However, there are two different approaches to dignify the reuse of gold dinar either in the form of physical gold dinar (PGD) as a currency or in the form of value backed by gold (BGD). Thus, the aim of this study is to analyze the prospect of using gold dinar as a currency to suit the current economy. This study is in qualitative form using the literature review approach while the analyzed data is based on monetary theory assessment. The four monetary theories used are the currency theory (the currency concept and function), the money supply and demand theory (optimal supply of money/optimum quantity of money), the Gresham's Law of {"}Bad Money Drive Out Good Money{"} and the Optimum Currency Area (OCA) theory. This study shows that the use of physical gold dinar as a currency is not practical to be implemented in the current economy because it contradicts with almost all the analyzed monetary theories. Meanwhile, the use of gold dinar as value backed illustrates lesser problems of disequilibrium of gold supply and demand and does not fulfill certain characteristics of money from the aspects of immunity and durability. Thus, this study finds that the mechanism prospect of gold dinar as a gold backed currency system (BGD) is more suitable to be implemented in the current economy as compared to physical gold dinar based (PGD) system.",
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N2 - The call to make gold dinar as a currency first arises when the current financial system shows various weaknesses so much so causing the global economics crises in the early 21st century. However, there are two different approaches to dignify the reuse of gold dinar either in the form of physical gold dinar (PGD) as a currency or in the form of value backed by gold (BGD). Thus, the aim of this study is to analyze the prospect of using gold dinar as a currency to suit the current economy. This study is in qualitative form using the literature review approach while the analyzed data is based on monetary theory assessment. The four monetary theories used are the currency theory (the currency concept and function), the money supply and demand theory (optimal supply of money/optimum quantity of money), the Gresham's Law of "Bad Money Drive Out Good Money" and the Optimum Currency Area (OCA) theory. This study shows that the use of physical gold dinar as a currency is not practical to be implemented in the current economy because it contradicts with almost all the analyzed monetary theories. Meanwhile, the use of gold dinar as value backed illustrates lesser problems of disequilibrium of gold supply and demand and does not fulfill certain characteristics of money from the aspects of immunity and durability. Thus, this study finds that the mechanism prospect of gold dinar as a gold backed currency system (BGD) is more suitable to be implemented in the current economy as compared to physical gold dinar based (PGD) system.

AB - The call to make gold dinar as a currency first arises when the current financial system shows various weaknesses so much so causing the global economics crises in the early 21st century. However, there are two different approaches to dignify the reuse of gold dinar either in the form of physical gold dinar (PGD) as a currency or in the form of value backed by gold (BGD). Thus, the aim of this study is to analyze the prospect of using gold dinar as a currency to suit the current economy. This study is in qualitative form using the literature review approach while the analyzed data is based on monetary theory assessment. The four monetary theories used are the currency theory (the currency concept and function), the money supply and demand theory (optimal supply of money/optimum quantity of money), the Gresham's Law of "Bad Money Drive Out Good Money" and the Optimum Currency Area (OCA) theory. This study shows that the use of physical gold dinar as a currency is not practical to be implemented in the current economy because it contradicts with almost all the analyzed monetary theories. Meanwhile, the use of gold dinar as value backed illustrates lesser problems of disequilibrium of gold supply and demand and does not fulfill certain characteristics of money from the aspects of immunity and durability. Thus, this study finds that the mechanism prospect of gold dinar as a gold backed currency system (BGD) is more suitable to be implemented in the current economy as compared to physical gold dinar based (PGD) system.

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