ISLAMIC COUNTRIES SHOULD CONTINUE TO USE PAPER CURRENCY

KUALA LUMPUR, Jan 17 (Bernama) -- Islamic countries should continue to use paper
currency instead of gold dinar as history has shown that the return to the
coinage system could increase interest rates and inflation would be difficult to
control.

Professor of Comparative Economic History at International Centre for Education
in Islamic Finance (INCEIF), Dr Murat Cizakca, said money should serve as a
medium of exchange, not as a commodity.

"We need to continue with paper currency, and the central banks controlling
paper currency should have full autonomy," he said.

Cizakca said this at a public lecture entitled, "Islamic Gold Dinar: Myths and
Reality" organised by the Association of Chartered Islamic Finance Professionals
and INCEIF here Monday.

He said gold supply was dominated by non-Islamic countries.

"The gold dinar will be exposed to speculation as the gold price also have its
ups and downs.

"Thus, Islamic countries should continue to use paper currency and increase
trade between each other, and eventually in the future agree to a common paper
currency," he said.

Meanwhile, Azrul Azwar Ahmad Tajudin, chief economist, strategic planning of
Bank Islam Malaysia Bhd, said history has shown that the use of currency based
on commodity would not help to control inflation.

"If inflation cannot be controlled, the real value of a worker's pay will
decline," he said.

Azrul said this when commenting on Cizakca's call to Islamic countries to
continue to use paper currency instead of gold dinar.
-- BERNAMA



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