Two Sides to the Islamic State Coin

CEP Research Analyst


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ISIS has declared its intention to issue its own currency, an ‘Islamic State’ dinar coin minted in gold, silver and copper.

ISIS’s ideology will be greatly served if it can implement its own system of coinage. First and foremost, the issuance of currency will further ISIS’s claim of being a fully functioning state, rather than an insurgent group. Furthermore, mockups reveal that the coins are designed to evoke 7th century currency in circulation under the Umayyad caliphate. To a group that so existentially markets itself as the restoration of the caliphate, this historical connection is a strong and advantageous symbol.

ISIS’s rejection of paper currency is also instrumental to its ideology. In the group’s announcement, ISIS characterizes the dinar as liberation from the international system of borrowing and lending ‘usury’ that ‘poisons’ the current market. In contrast, coins with firm and ‘inherent’ value are presented as the only religiously legitimate, and thereforem economically stable alternative. In this proclamation, ISIS simply denies the inconvenient truth that the value of precious and industrial metals are themselves subject to fluctuations in international markets as well as the perceived value of the U.S. dollar. Such a recognition would undermine ISIS’s claim of total monetary independence from the prevailing, ‘un-Islamic’ international money system.

In strictly financial terms, ISIS’s announcement will provide almost no benefit for a group that the U.S. Treasury Department’s David S. Cohen calls “the best-funded terrorist organization we have confronted.” Politically, individuals residing in ISIS controlled territory may be made further dependent on the group if they are forced to use its currency, but the traders and smugglers involved in the oil and arms trade who deliver the vast majority of ISIS income and weapons are highly unlikely to accept ISIS’s new currency for payment. Clearly, anyone attempting to pass the ISIS currency outside ISIS territory will likely be subject to charges of terrorism.

It is unclear whether ISIS will follow through on its announcement in the near future, or if the announcement alone has already satisfied its main ideological purpose, i.e. to demonstrate its intention, if not capacity, to fulfill the functions of a state.