Transition to A True Currency: Impact of COVID-19 on The World Currency System
Keywords:
COVID-19, Currency System, Islamic Currency, Macroeconomics
Abstract
The purpose of this paper is to manifest the unrefined design of the transition of the currency system from centralized fiat money based on the US Dollar to the real currency system that relies on the precious metals-based currency after reviewing the rapid changes from the COVID-19 phenomenon to various sectors of life, including the currency system. This paper used qualitative research with a historical analysis approach or historiography that deals with precious metals-based currency in the pastime, and it is used to produce relevant analyses for the future. First, states that prefer to transition to a precious metals-based currency ought to combine them in a single political institution that can provide a strong bargaining position in politics. Second, they have to withdraw gold reserves from the major central banks by making a trade balance surplus paid only in precious metals. Third, at this transitional stage, the use of oil reserves as a political economy of energy to withdraw gold reserves at the major central banks and the issuance of money is temporary until the state is fully stable and a new wave of gold reserves begin to enter. The underlying study will provide a comprehensive analysis of the currency system scheme in this modern era. Previous works have only focused on the superior aspects of the precious metals-based system and criticisms of the fiat money system, without detailing the steps to supersede the fiat money-based system. This paper used qualitative research with a historical analysis approach or historiography. It attempted to fill this glaring gap and expected to produce a study for implementation within the state scope.
References
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Bresser-Pereira, L. C. (2020). Financing COVID-19, Inflation and the Fiscal Constraint. Forum for Social Economics, 1-17.
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Krugman, P. (1995). Currencies and Crises. Cambridge, MA: MIT Press.
Lewis, N. (2020, March 27). What If We Had A Gold Standard System, Right Now?. Retrieved from Forbes: https://www.forbes.com/sites/nathanlewis/2020/03/27/what-if-we-had-a-gold-standard-right-now/?sh=7dd14d2a3e58
Lin, J. Y. (2020). China’s economic outlook against the backdrop of the COVID-19 pandemic and US-China tensions. Journal of Chinese Economic and Business Studies, DOI: 10.1080/14765284.2020.1854024
Maldonaldo, W. L., Ribeiro, J., & Tourinho, O. A. F. (2019). Testing Four Types of Bubbles in BRICS Exchange Rates. Emerging Markets Finance and Trade, DOI: 10.1080/1540496X.2019.1603542
Malkin, A. (2019). Challenging the liberal international order by chipping away at US Structural power: China’s state-guided investment in technology and finance in Russia. Cambridge Review of International Affairs, DOI: 10.1080/09557571.2019.1642300
McMurtry, J. (2013). The Cancer Stage of Capitalism, 2nd ed. Halifax: Pluto Press.
Meera, A.K.M. (2002). The Islamic Gold Dinar. Petaling Jaya: Pelanduk Publications.
Meera, A.K.M. & Larbani, M. (2004). The gold dinar: the next component in Islamic economics, banking and finance. Review of Islamic Economics, 8(1), 5-34
Michie, J. (2020). The covid-19 crisis – and the future of the economy and economics. International Review of Applied Economics, 1-4.
Moss, D. (2020, August 24). There's No Winning the Coronavirus Recovery. Retrieved from Bloomberg: https://www.bloomberg.com/opinion/articles/2020-08-23/coronavirus-malaysia-s-economy-shows-doing-the-right-things-didn-t-help
Nezhad, Z. (2004). A Brief History of Money in Islam and Estimating the Value of Dirham and Dinar. Review of Islamic Economics, 8(2), 51-65.
Norrlof, C. (2014). Dollar hegemony: A power analysis. Review of International Political Economy, 21(5), 1042-1070.
Nye, J. S. (2002). The Paradox of American Power: Why the World’s Only Superpower Can’t Go it Alone. Oxford: Oxford University Press.
Palley, T. (2014). Money, Fiscal Policy, and Interest Rates: A Critique of Modern Monetary Theory. Review of Political Economy, 27(1), 1-23.
Pinshi, C. P. (2020). Monetary Policy, Uncertainty and COVID-19. Journal of Applied Economic Sciences, 579-593.
Plakandaras, V., Gupta, R., Gil-Alana, L. A., & Wohar, M. E. (2018). Are BRICS exchange rates chaotic? Applied Economics Letters, DOI: 10.1080/13504851.2018.1537473
Roubini, N. (2020, August, 25). Is this the end of the road for dollar dominance? Retrieved from The Guardian: https://www.theguardian.com/business/2020/aug/25/is-this-the-end-of-the-road-for-dollar-dominance
Rueff, J. (1972). The Monetary Sin of the West. New York: Macmillan.
Sakaguchi, A. (2020). On the Institutional Theory of Money: Learning from J. R. Commons’ Institutional Economics. Journal of Economic Issues, 54(4), 975-986.
Saidi, Z. (2006). The Implementation of The Islamic Gold Dinar Economy: The Indonesian Experience. In Ahmed Kameel Mydin Meera (ed.). (2009). Real Money: Money Payment Systems from an Islamic Perspective. Kuala Lumpur: IIUM Press.
Sgambati, S. (2020). Historicizing the money of account: a critique of the nominalist ontology of money. Journal of Post Keynesian Economics, DOI: 10.1080/01603477.2020.1788396
Stokes, D. (2013). ‘Achilles’ Deal: Dollar Decline and US Grand Strategy after the Crisis. Review of International Political Economy, DOI: 10.1080/09692290.2013.779592.
Trunkos, J. (2020). Comparing Russian, Chinese and American Soft Power Use: A New Approach. Global Society, DOI: 10.1080/13600826.2020.1848809
Wray, R. (2012). Modern Money Theory. New York: Palgrave MacMillan.
Yaacob, S.E. (2012). Superiority of the gold dinar as currency: study based on the history of Islamic civilization. Islamiyyat, 34(1), 119-129.
Yuning, Z. (2020, May 8). U.S. luxury retailer Neiman Marcus files for bankruptcy amid COVID-19 crisis. Retrieved from ECNS: http://www.ecns.cn/news/economy/2020-05-08/detail-ifzwefvs2285319.shtml
Abū ‘Ubaid. (1989). Kitāb Al-Amwāl. Beirut: Dār al-Surūq.
Al-Balādhurī, A. (1956). Futūh Al-buldān. Cairo: Alkutobu Alarabia.
Al-Bāqī. (1994). Mu’jam Mufahras li Al-Fāz Al-Qurān Al-Karīm. Cairo: Dar al Hadith.
Al-Dhahabī. (1934). Tahriru al-Dirham wa al-Dinar. Cairo: Dar-al Tabaa.
Al-Maqrīzī. (1913). al-Nuqūd. Cairo: Daru Ehia Aluloom.
Al-Māwardī. (1938). al-Ahkām al-Sultaniyya. Beirut: Daru Altabaa.
Al-Māwardī. (1999). Al-Hawī al-Kabīr. Beirut: Dār al-Kutub al-‘Ilmiyah.
Al-Nabhānī, T. (1990). Nidhām al-Iqtisādi fī al-Islām. Beirut: Dar al Ummah.
Al-Nawawī. (2003). Al-Majmū’ Syarh Al-Muhadhdhab. Jeddah: Maktabah Al-Irshād.
Al-Qaradāwī, Y. (1994). Fiqh Al-Zakāt. Cairo: Maktabah Wahbah.
Al-Qarāshī. (1984). Kitāb Al-Kharāj. Cairo: Al-Matba’ah AsSalafiyyah.
Al-Shawkani. (1987). Nayl al-Awtar Sharh Muntaqa al-Akhbar, Vol. 7. Cairo: Maktabah Dār al-Turath.
Al-Shīrāzi. (1995). Al-Muhadhdhab. Beirut : Dār al-Kutub al-‘Ilmiyah.
Al-Shustari. (1964). Tārīkh Miqyāsāt dār Asr Hukūmat Islāmī. Tehran: Chup Alrahim.
Antonopoulos, P., & Cottle, D. (2018). Venezuela’s 2017 Crisis: A Failed Bolivarian Experiment or a Legitimate Claim of US Imperialism?. Critique: Journal of Socialist Theory, 46(1), 49-64.
Arif, A., & Shabbir, M. S. (2019). Common currency for Islamic countries: is it viable?. Transnational Corporations Review, 11(3), 222-234,
Aslund, A. (2020). Responses to the COVID-19 crisis in Russia, Ukraine, and Belarus. Eurasian Geography and Economics, DOI: 10.1080/15387216.2020.1778499
Bambrough, B. (2020, April 6). The Future of Monetary Policy is Asian. Retrieved from Forbes: https://www.forbes.com/sites/billybambrough/2020/04/06/the-coronavirus-covid-19-crisis-has-changed-money-forever/
Beggs, M. (2017). The State as a Creature of Money. New Political Economy, 22(5), 463–477.
Bjerg, O. (2014). Making Money: The Philosophy of Crisis Capitalism. London: Verso.
Blaug, M. (1990). On the historiography of economics. Journal of the History of Economic Thought, 12(1), 27–37.
Bouhali, H., Dhahbani, A., & Dinar, B. (2020). Sustainability of basket peg choices in the post-COVID-19 era: new evidence from Morocco & Tunisia. Macroeconomics and Finance in Emerging Market Economies, 1-20.
Bowles, P., & Wang, B. (2008). The rocky road ahead: China, the US and the future of the dollar. Review of International Political Economy, 15(3), 335-353.
Bresser-Pereira, L. C. (2020). Financing COVID-19, Inflation and the Fiscal Constraint. Forum for Social Economics, 1-17.
Bryan, D. & Rafferty, M. (2013). Fundamental value: a category in transformation. Economy and Society, 42(1), 130–153.
Cohen, B. J. (2006). The Macrofoundations of Monetary Power, in D. Andrews (ed.) International Monetary Power, Ithaca: Cornell University Press, 31–50.
D’Arista, J. (2009). The Evolving International Monetary System. Cambridge Journal of Economics, 33(1), 633-652.
Gärtner, M. (2016). Macroeconomics (5th Edition). London, UK: Pearson.
Gibson, J., & Olivia, S. (2020). Direct and Indirect Effects of Covid-19 On Life Expectancy and Poverty in Indonesia. Bulletin of Indonesian Economic Studies. 56(3), 325-344.
Ibn Al-Jawzī. (1932). Al-Muntazam fī Tārīkh Al-Mulūk wa’l-Umam. Cairo: Matba’at al Adab.
Ibn Kathir. (1995). Al-Bidayāh wa Al-Nihāyah, Vol. 9. Cairo: Dār Ibn Kathir Li-Tibāt.
Ibn Khaldūn, A. M. (1917). Muqaddimat. Cairo: Ketabu Alshabab.
Ibn Manzūr. (1955). Lisān Al-‘Arab. Vol. 15. Beirut: Dar al-Sadir.
Keoun, B. (2020, March 27). Story from Markets After Coronavirus ‘War,’ Bretton Woods-Style Shakeup Could Dethrone the Dollar. Retrieved from Coindesk: https://www.coindesk.com/after-coronavirus-war-bretton-woods-style-shakeup-could-dethrone-the-dollar
Krugman, P. (1995). Currencies and Crises. Cambridge, MA: MIT Press.
Lewis, N. (2020, March 27). What If We Had A Gold Standard System, Right Now?. Retrieved from Forbes: https://www.forbes.com/sites/nathanlewis/2020/03/27/what-if-we-had-a-gold-standard-right-now/?sh=7dd14d2a3e58
Lin, J. Y. (2020). China’s economic outlook against the backdrop of the COVID-19 pandemic and US-China tensions. Journal of Chinese Economic and Business Studies, DOI: 10.1080/14765284.2020.1854024
Maldonaldo, W. L., Ribeiro, J., & Tourinho, O. A. F. (2019). Testing Four Types of Bubbles in BRICS Exchange Rates. Emerging Markets Finance and Trade, DOI: 10.1080/1540496X.2019.1603542
Malkin, A. (2019). Challenging the liberal international order by chipping away at US Structural power: China’s state-guided investment in technology and finance in Russia. Cambridge Review of International Affairs, DOI: 10.1080/09557571.2019.1642300
McMurtry, J. (2013). The Cancer Stage of Capitalism, 2nd ed. Halifax: Pluto Press.
Meera, A.K.M. (2002). The Islamic Gold Dinar. Petaling Jaya: Pelanduk Publications.
Meera, A.K.M. & Larbani, M. (2004). The gold dinar: the next component in Islamic economics, banking and finance. Review of Islamic Economics, 8(1), 5-34
Michie, J. (2020). The covid-19 crisis – and the future of the economy and economics. International Review of Applied Economics, 1-4.
Moss, D. (2020, August 24). There's No Winning the Coronavirus Recovery. Retrieved from Bloomberg: https://www.bloomberg.com/opinion/articles/2020-08-23/coronavirus-malaysia-s-economy-shows-doing-the-right-things-didn-t-help
Nezhad, Z. (2004). A Brief History of Money in Islam and Estimating the Value of Dirham and Dinar. Review of Islamic Economics, 8(2), 51-65.
Norrlof, C. (2014). Dollar hegemony: A power analysis. Review of International Political Economy, 21(5), 1042-1070.
Nye, J. S. (2002). The Paradox of American Power: Why the World’s Only Superpower Can’t Go it Alone. Oxford: Oxford University Press.
Palley, T. (2014). Money, Fiscal Policy, and Interest Rates: A Critique of Modern Monetary Theory. Review of Political Economy, 27(1), 1-23.
Pinshi, C. P. (2020). Monetary Policy, Uncertainty and COVID-19. Journal of Applied Economic Sciences, 579-593.
Plakandaras, V., Gupta, R., Gil-Alana, L. A., & Wohar, M. E. (2018). Are BRICS exchange rates chaotic? Applied Economics Letters, DOI: 10.1080/13504851.2018.1537473
Roubini, N. (2020, August, 25). Is this the end of the road for dollar dominance? Retrieved from The Guardian: https://www.theguardian.com/business/2020/aug/25/is-this-the-end-of-the-road-for-dollar-dominance
Rueff, J. (1972). The Monetary Sin of the West. New York: Macmillan.
Sakaguchi, A. (2020). On the Institutional Theory of Money: Learning from J. R. Commons’ Institutional Economics. Journal of Economic Issues, 54(4), 975-986.
Saidi, Z. (2006). The Implementation of The Islamic Gold Dinar Economy: The Indonesian Experience. In Ahmed Kameel Mydin Meera (ed.). (2009). Real Money: Money Payment Systems from an Islamic Perspective. Kuala Lumpur: IIUM Press.
Sgambati, S. (2020). Historicizing the money of account: a critique of the nominalist ontology of money. Journal of Post Keynesian Economics, DOI: 10.1080/01603477.2020.1788396
Stokes, D. (2013). ‘Achilles’ Deal: Dollar Decline and US Grand Strategy after the Crisis. Review of International Political Economy, DOI: 10.1080/09692290.2013.779592.
Trunkos, J. (2020). Comparing Russian, Chinese and American Soft Power Use: A New Approach. Global Society, DOI: 10.1080/13600826.2020.1848809
Wray, R. (2012). Modern Money Theory. New York: Palgrave MacMillan.
Yaacob, S.E. (2012). Superiority of the gold dinar as currency: study based on the history of Islamic civilization. Islamiyyat, 34(1), 119-129.
Yuning, Z. (2020, May 8). U.S. luxury retailer Neiman Marcus files for bankruptcy amid COVID-19 crisis. Retrieved from ECNS: http://www.ecns.cn/news/economy/2020-05-08/detail-ifzwefvs2285319.shtml
Published
2021-06-24
How to Cite
Alamsyah, I., & Juliana, J. (2021). Transition to A True Currency: Impact of COVID-19 on The World Currency System. Jurnal Kajian Peradaban Islam, 4(2), 42-47. https://doi.org/https://doi.org/10.47076/jkpis.v4i2.65
Section
Islamic Economics and Finance
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