A Historical Analysis of the Currency System in the Era of Prophethood and Islamic Governments

تطوير العملة في العصر النبوي والحكومات الإسلامية: دراسۃ تاریخیۃ

Abstract

This article explores the historical significance of currency during the time of the Holy Prophet Muḥammad (ﷺ) and throughout Islamic empires, particularly focusing on the use of Dīnār and Dirham as a standard unit of exchange. Initially, during the Prophet's era, trade in the Arabian Peninsula relied on the weight of these coins rather than their numerical value. This practice continued during the reign of the Rāshidūn Caliphs, notably established by Ḥaḍrat ‘Umar bin al-Khaṭṭāb (may Allah be pleased with him) as an official standard. The use of Dīnār and Dirham persisted as the currency standard throughout the Islamic world, even until the end of the Ottoman Caliphate. Despite variations in the weight of coins in different regions and under different ruling dynasties, the legal standardization of Dīnār and Dirham remained consistent. The Quran's mention of Dīnār and Dirham in matters of eternal reward, along with the Holy Prophet's (ﷺ) incorporation of these coins into Islamic law, solidified their importance within the Islamic economic framework. From financial transactions such as usury and Zakāt to trading practices like sale and exchange, Dīnār and Dirham played a crucial role in resolving various economic issues according to Islamic jurisprudence. Additionally, they were integral to determining the value of stolen goods for legal punishments. This article provides an overview of the historical evolution and enduring significance of Dīnār and Dirham in Islamic economies, emphasizing their role in shaping economic practices and legal frameworks from the time of the Holy Prophet Muhammad (ﷺ) to Islamic empires.