A possibly Shari’ah-compatible global currency to stabilize the monetary system

Abstract EN

The international monetary system is structurally instable.

Furthermore, all official currencies in the world today are created through bank debt, and therefore automatically involve interest.

A systemic way to improve stability would be to diversify the types of currencies and the agents who create them.

The proposed ‘Trade Reference Currency’ would be a global, purely digital currency, fully backed by a standardized basket of the major commodities in world trade such as oil, copper, gold, silver, coffee and cocoa.

The storage costs of that basket would be covered by a demurrage fee paid by the bearer of the currency.

Because it fits the existing legislations on countertrade (international barter), it would not require any new international agreements to start it.

In addition to more stability for the whole system, this currency would also operate counter cyclically to the business cycle, realign financial interest with long-term thinking, and possibly be Sharīʿah-compatible.