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Malaysian State Introduces "Islamic" Gold and Silver Currency

Peter Anthony Tariche
Aug 14, 2010 at 10:16 AM

The state government of Kelantan has introduced gold and silver as legal tender in Malaysia. Nik Abdul Aziz, the state's cheif minister, has pushed for gold and silver in order to protect against inflation because of its "intrinsic value."

From Washington Post:

A Malaysian state's attempt to revive use of gold and silver coins common in early Islamic societies has run afoul of the country's central bank, which said Friday that local governments have no authority to issue their own currency.

The gold dinar and silver dirham coins provide an alternative to this Muslim-majority country's currency, the ringgit, in the northeastern state Kelantan, which is governed by the Pan-Malaysian Islamic Party, a conservative opposition group that promotes religious policies in its rule.

The gold dinar was the official currency of Muslim societies for centuries. The value of the coins used in Kelantan can fluctuate according to market prices, but officials say it remains a better alternative to currency affected by the U.S. dollar and other foreign currency.