introducing a production based currency in IEA

Introducing A production based currency (The Islamic dinar) in the IEA 1. Why is the issuance of a new currency is necessary A nationally self-reliant Jihadi economy cannot be organized without complete control of the issuance and distribution of the currency and credit system by the Islamic government This is because the issuance and distribution of currency and credit in a capitalist system is controlled by the commercial banking and financial intermediation institutions which manage currency and credit stock flow as part of money market transactions. The over whelming proportion of currency in circulation in capitalist countries is created by banks and financial intermediaries - thus only about 4 percent of money supply in UK in 2022 is state issued money (Mo) (Details of how the banking/financial system creates money is given in a book “Money and Banking in Pakistan “ published by Oxford university press karachi. As capital markets have become bloated, money supply has skyrocketed throughout the capitalist world. This has become possible since 1971 when the dollar was delinked from gold. Since then the issuance and calculation of dollar depends primarily on decision taken by the American financial system (FRS and Wall Street). If issuance and distribution of money (currency and credit) is not fully controlled by the Islamic government, then the dominance of imperialist money market over the national jehadi economic cannot be avoided. National sovereignty will be (at least partially) subordinated to global capitalism. This is why the Geneva fund established in 2022 by the imperialist has prioritized the printing of Afghani currency in its operational agenda. Arguments for the nationalization of the financial system According to sharia, money is not a commodity, and the sale and purchase of money to extract surplus money (RIBA) from such transactions is disallowed. Therefore there can be no money and capital markets in an Islamic state. This means that money (currency and credit) is a public good and there is no room for private sector institutions earning revenue through RIBA and Gharrar based transactions in an Islamic political economy. State management of the tamweeli system must involve currency and credit planning and monopoly control over all foreign currency inflow and outflows from the national jehadi economy. We must take immediate steps (whatever the cost is) to print our own currency and stop inflow of foreign afghanis (German or Geneva fund based) from entering and circulation in the national jehadi economy. All attempts at bringing Afghanis into the country or smuggling rupees, toman, Dollar into the national jehadi economy must be severely punished by law all currency in circulation must be issued and distributed by the IEA. We advocate the gradual replacement of the Afghani by a new currency - The Islamic dinar. This replacement will help in motivating the mukhlaseen e deen and enhance the public acceptance of new currency. The issuance of the new currency should not be linked to gold, or any other commodity or foreign exchange reserve of DA Afghnistan Bank Afghanistan. Estimate of the volume of Islamic dinar in any given period should be determined on the basis of the production capacity and the planned rate of growth of the national jehadi economy at existing (2023) price structure. This should provide a basis for currency planning. Currency planning should be accompanied by credit planning which should estimate working funds with Daulat afzai (investment) requirements of sub sectors of the national jehadi economy. The currency and credit plan should be limited to a corresponding national production plan, details of which are given in our document “Some suggestions for developing a planning system for IEA “. Issuance of currency should the sole responsibility of DA Afghnistan Bank. Distribution of currency and credit should be the responsibility of nationalized Tamweeli network institutions (IATI). Details of which are given in our document “Some suggestions for developing a planning system “. Distribution of currency and credit must be based on existing and anticipated needs of customers, traders and investors.

Steps towards the Issuance of the Islamic Dinar in the IEA Estimation of the total volume of currency in circulation (in the form of Afghanis) by Da Bank Afghanistan (DAB) in 2023 should be prepared. Estimates should also be made of the total volume of foreign currencies (dollars, Pakistani rupee, and Irani toman) in circulation in Afghanistan in 2023. [Data for this may be obtained from commercial banks and non-bank financial institutions and from reports of DAB for 2019, 2020, 2021 and 2022 which may provide a basis for developing forecasts for 2023. If estimates of GDP/GNP are available for previous years they may also be used as a basis for forecasting currency in circulation for 2023] Formulation and implementation of a system to ensure that DAB is the sole issuer of currencies – both Afghani and Islamic Dinar. Formation and implementation of a system to ensure that all foreign currencies entering Afghanistan are immediately surrendered to DAB which converts them into Afghani/Islamic Dinars at fixed but periodically managed exchange rates. No currency notes issued by the Geneva based funds should be allowed to circulate in Afghanistan. Enactment and implementation of a law to abolish and forbid all private transactions in currencies (Afghani, Islamic Dinar, Dollar, Rupee etc.) Enactment of a law establishing Islamic Dinar as joint legal tender with Afghanis. The law should detail strict punishment for the persons/institutions who refuse to accept Islamic Dinar as transaction payments. Printing of Islamic Dinar at national mints. The design of Islamic Dinar currency notes should be nearly identical to the design of Afghanis, distinguishable mainly by a watermark The value of Islamic Dinars should be at par with Afghanis. One Afghani equals one Islamic Dinar, 100 Afghanis equals 100 Islamic Dinars etc. Islamic Dinars should be issued with the same denominations in which Afghanis are issued. Depending upon the estimation of currency in circulation in 2023 and currency demand forecasts for 2024, Islamic Dinars should be issued in an amount equivalent to 17 percent of currency in circulation forecasts for 2023 in January first 2024. Circulation of Islamic Dinars should be facilitated by Payment of government and public sector salaries in Islamic Dinars Conversion of all bank and non-bank financial institutions reserves at DAB in to Islamic Dinars. Payment for services produced to the government and public sector organizations should be in Islamic Dinars In rising proportions (say 50 percent) of all tax and non-tax revenue received in 2024 should be in Islamic Dinars Banks and non-Banking financial institutions should be required to surrender a gradually increasing proportion of their Afghani receipts to DAB which would convert them into Islamic dinars and return them to banks and non-bank institutions at par value and/or convert them into reserves (Mo) Foreign exchange inflows surrendered by exporters’ foreign investors etc. to DAB should be divided into two segments:

A portion of reserves for allocation to importers for financing imports A portion converted into Islamic Dinars for local use Exporters to Afghanistan (especially from Pakistan, Iran and Gulf Arabs) may be required to accept a rising proportion (say 10 percent in 2024) of their earnings in Islamic Dinar. Efforts to establish a currency union with Iran and swap arrangements with Pakistan should be considered to be initiated. The complete replacement of the Afghani by the Islamic Dinar be planned over 18 months period (to be completed by say June 2025). In every quarter during this period the proportion of Islamic Dinars in total currency in circulation should be increased by approximately 16.66 percent. Please Note The Islamic Dinar issuance and circulation is based on the physical production of goods and services in a given year in Afghanistan – not on the store of gold or foreign exchange reserves of DAB. Therefore approximately accurate estimation of the growth and volume of production (GDP) are absolutely essential to estimating volume of Islamic Dinars in circulation in any given year. This estimate may be presently based on existing praxis. In future years, government may set planned praxis specific sectors (detail in DAIMG document “developing planning syestem for Afghan economy). Estimation of volume and growth of physical output requires the development of an input-output table for the Afghan economy. We are aware that the latest input-output table for Afghanistan was prepared by some international agency for the year 2016. This is only partially useful as the structure of the economy has changed after the Islamic revolution due to the withdrawal of all foreign financed projects. DAIMG is working on preparing a framework for the preparation of an input-output table for 2023, data for which will have to be supplied by the Afghan Ministry of Planning. If the Ministry of Planning is undertaking such work we would be very grateful if we are informed of this. In capitalist economies money supply consists of both currency and credit. The issuance and circulation of credit is controlled by privately owned banks and non-bank financial institutions. As the economy grows the share of credit (M2, M3) in the total money supply grows exponentially (in the USA the share of currency in total money supply in 2022 is only about 3 percent). Therefore the government gradually loses its grip on the money market. In the medium term therefore government control of the credit system is of vital importance. Currency planning must be accompanied by credit planning. This requires: Abolishing of the proportional reserve banking system, whereby banks keep only a small proportion of their reserves in the central bank and in the form of own reserves. Hundred percent reserves should be required. Nationalization of all banks and financial intermediaries. DAIMG therefore recommends that steps be taken to initiate credit planning in concurrence with currency planning and that by June 2024 all bank and financial institutions are restructured in the form of a tamveeli system. (Details in our submission “Developing a Planning System for IEA some Suggestions”)

You must realize that the issuance of Islamic Dinar is a first step towards a total overhaul and change in the relationship of the Afghan economy to the global capitalist monetary and trading system - in which all transactions are based on riba (interest) and gharar (speculation). This requires that: All transactions with global capitalist money and commodity markets be undertaken by the Islamic government and its agencies and all direct communication and transactions between the Afghan private sector and global capitalist money and commodity markets be severed. Foreign trade and foreign exchange transactions be nationalized – the IEA must have complete monetary control over all foreign exchange inflows and outflows into and from Afghanistan. IEA must seek to function outside the framework of global financial regulations. It must not become a member of institutions such as the IMF, BIS, FATF, the World Bank, the Islamic Development Bank or ADB etc. In negotiation with foreign trading and investment partners it must seek to develop an Afghan specific trade and investment regulatory system (as the USSR did during the 1920s and China did during the 1950s and 1960s). This is the essence of a self-reliant economic policy which Afghanistan is quite capable of pursuing given its immense resource potential in minerals and agriculture and its population of over 35 million. Developing close trade and investment relations with those countries which are being excluded from the global financial regimes through the imposition of US sanction – Iran, Russia, Venezuela, Belarus, Cuba, North Korea etc. – is of vital importance for developing a viable alternative to the global financial regulatory regime. DAIMG recommends the convening of a conference at Kabul involving representation of public and private sector organizations from Iran, Russia, North Korea, Venezuela, Belarus and Cuba. The conference shall seek to formalize trade, investment, currency swap and currency union agreement between Afghanistan and the institutions of these countries. Successfully maintaining an economic policy for national self-reliance requires mass mobilization. The mobilization of a Dawah majlis based at the tribal, community and district level should accompany the launch of the Islamic Dinar. The Dawah majlis must introduce the Islamic Dinar at the mass level as an instrument for preservation of the Islamic character of Afghanistan and as a means for defeating the imperialist campaign of terrorism and purported regime change. The credibility of the monetary policy of the Islamic government depends on the enthusiastic acceptance of the Islamic Dinar and its associated credit policy by the Afghan masses. Note on gradual withdrawal of Afghanis and their replacement by Islamic Dinars in IEA Our previous submission on this issue conceived the gradual issuance of Islamic Dinars by DAB. We suggested that by June 2025 all currencies issued by DAB should be in the form of Islamic Dinars. Currently all domestic currency in circulation in the economy is in the form of Afghanis. We recommend a gradual withdrawal of Afghanis from circulation and their replacement by the Islamic Dinars.

This replacement may take place in the following way: All banks and financial institutions may be required to surrender a portion of their currency holdings of Afghanis and the DAB may convert them into Islamic Dinars and return them to the banks. Quarterly targets may be set for such replacement (say 10 percent of all bank held Afghanis may be required to be converted by March 2024, 20 percent by June 2024, 35 percent by September 2024 and so on). Retailers and businesses should be encouraged to convert a rising proportion of their Afghanis into Islamic Dinars in their transactions with banks or directly with DAB branches. All tax receipts from business should be accepted only in Islamic Dinars. However, no mandatory targets should be set for business for conversion of Afghanis into Islamic Dinars. The process should be entirely voluntary. A nationwide campaign should be launched through the Dawah Majlis and the national media to encourage the general public to surrender Afghanis for Islamic Dinars. Again Ministry may set non mandatory targets for evaluating the success of the scheme. Some modest monetary incentives for conversion of Afghanis into Islamic Dinars may be provided (e.g. for every 100 Afghanis surrendered for conversion into Islamic Dinars, 102 Islamic Dinars are given) but these incentives should be (so as not to effect the general price level) and the main reliance must be on the activities of the Dawah Majlis moralization. In effect DAIMG proposes the operation of an open ended dual currency system (such a system was effectively operated in the USSR during the 1920s). If this scheme is adopted while all currency issued by DAB will be in the form of Islamic Dinars by June 2025. It cannot be said in certainty when Afghanis will be completely substituted by Islamic Dinars. This target may be achieved by June 2025 or much later. However, the scheme will Insha Allah be successful if: All currencies – both Afghanis and Islamic Dinars are issued on the basis of estimates of national physical production (of goods and services) and not on holdings of gold or foreign reserves. It is ensured that no foreign currency (dollar, rupee, toman, currency issued by the Geneva Fund etc.) circulates in Afghanistan. All foreign currency inflow are surrendered to DAB. A mass based dawah majlis is functional that contextualizes economic practices with the moral and spiritual life of the masses. The credibility of all economic policy (especially anti-inflationary monetary policy) depends crucially on the mass acceptance of the fact that ma’ash is only a means for the achievement of falah in ma’ad. The initiation of the activities of a mass based fully operational Dawah Majlis is of crucial importance to defeat the imperialist attempts to separate the Afghan masses from the revolutionary struggles through fostering terrorism in Afghanistan. The success of this scheme also depends upon: The nationalization of all banks and financial institutions and its replacement in Afghanistan with a tamveeli structure. We think this is urgently necessary and could be very grateful if DAB informs us of the obstacles in the process. If this is done then we will try to develop suggestions for overcoming the obstacles.

The development of a framework for effective credit planning to ensure that no speculative or interest based money or capital market transaction are legalized in Afghanistan in the form of Islamic banking or foreign investment and trading contracts. Attempts to coordinate investment and trade contracts with countries being thrown out of the international framework, patenting and trade system – Iran, North Korea, Venezuela, Belarus, Cuba and Russia. The IEA islamia cannot submit to the regulatory regime of the international trade, finance and property system since it is riba and gharar based. Tentatively, slowly and partially we must seek to develop an alternative trade and financial regulatory transactional framework in cooperation with the other “excluded” countries. We therefore propose the holding of a conference in Kabul during 2024 to which private businesses and public sector institutions from Iran, Russia, North Korea etc. should be invited to formulate trade, investment and currency swap operations – cooperation with Iran is particularly important both for investigating the possibility of the formation of customs and currency union and for formulating a joint strategy for defeating American terrorism in the region. Such a cooperation can pave the way towards a recognition of the Islamic regime by these countries. Defense cooperation with Russia is also important to strengthen air defense against American drone attacks which are just about to begin given the November 2022 statement of the Pentagon and latest UN recomindation that since TTP cannot be controlled by Afghan government, imperialist intervention shall be envisaged. Dr Muhammad Tahir Dr Aamir Siddiqui Muhammad Younas Qadri Javed Ahmed Sheikh Suhail Rumi