The idea of a new standardized precious metal currency based on historic Islamic principles is gaining interest in parts of Malaysia, after the state of Kelantan introduced gold dinars and silver dirhams earlier this year and gave them official status alongside the Malaysian Ringgit. Although the idea of a parallel currency remains controversial and this not Kelantan’s first attempt to re-introduce the dinar, interest in precious metals has increased lately from Muslims and non-Muslims alike as their values increase and the world’s fiat currencies begin to fluctuate wildly.

The Kelantan coins are not intended as collectors’ items or investment, however, but for use in daily transactions. Their exact metal contents are mandated by the World Islamic Trade Organization (WITO) with one dinar being 4.25 grams of 22 carat gold and one dirham 2.975 grams of pure silver. Coins are available in various denominations of each and are accepted by anyone participating in the project, including banks, charities and the government itself.

Demand has apparently been such that coins are now in short supply, and other states are looking on with interest. Perak would like to introduce its own currency along the same principles and Kelantan’s coins will be sold in Selangor and Terengganu through private distributors. Kelantan itself is ramping up the project with a proposal to state Assembly members to receive 50% of their salaries in dinar/dirham, should they choose. Kelantan also plans to set up a depository for the coins and introduce an ‘e-dinar’ card, in the hope the new currency will catch on internationally.

sources: Bernama & others