Last Thursday, the self-proclaimed Islamic State (ISIS) announced that they will be minting their own currency, together with design mock-ups of how the coins will look.
According to a statement issued by the group's treasury department, Bayt Al-Mal, the currency will exist separate from "the tyrannical financial system" which use "satanic usury" and have been "imposed upon Muslims" which serve to "enslave and impoverish" them.
"Based on the directive of the Emir of the Believers in the Islamic State, Caliph Ibrahim, may Allah preserve him, to mint currency for the Islamic State, as it is far removed from the tyrannical monetary system that was imposed on the Muslims and was a reason for their enslavement and impoverishment, and wasting the fortunes of the Ummah, making it easy prey in the hands of the Jews and Crusaders, the Treasury Department studied the matter and presented a comprehensive project, by the grace of Allah, to mint a currency based on the inherent value of the metals gold and silver." (translation by Site Intelligence)
The value of the coins will be based on the market value of gold and silver, which we know is extremely volatile and, as such, it is unclear how products and services in ISIS controlled territories will be priced – how many coins will a loaf of bread cost?
The ISIS proposed currency will have seven coins called Dinars – two gold, three silver and two copper. The largest value coin will be the five dinar which will contain 21.25g of gold (valued at £525.30 at the time of writing). The lowest value coin will be a 10g copper coin worth about five pence.
Logistically, it is unclear how ISIS will issue this currency. Although ISIS has an estimated daily oil revenue of $1 million, $20 million in kidnapping ransoms and over $2 billion in assets, it is not clear where or how it will acquire the supply of the precious metals it will need to mint these coins.
ISIS' plan to create its own currency aims to bolster its claim that it is a functional nation and not just a terrorist organisation. However, since territories in Iraq and Syria fall in and out of the group's hand, the acceptability of the currency as a payment method won't be widespread or stable.
Not to mention that most foreign investors won't be able to "invest" in this currency without being charged with "providing material support to a terrorist entity".
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