Abstract

PurposeThe most prominent and persistent problems of our global monetary system are instability and imbalances. We propose an international monetary model to solve these problems while at the same time move the model closer to Maqāṣid Sharīʿah (objectives of Sharīʿah). We name this an organic global monetary model or abbreviated as OGM. OGM is an international monetary model directly built on the national monetary system of each member country so that the two can co-exist.Design/methodology/approachModel design, theory and literature.FindingsThe model can eliminate interest rates at the central bank level, create non-tradable international money, and make a more stable international monetary system.Originality/valueOriginal.

Highlights

  • 1.1 Problem of instability The most prominent and persistent problems of the global monetary system are instability and imbalances

  • Countries in the world have to build strong and expensive forex reserves to face the threat. They sometimes raise interest rates to slow down the economy to do so

  • We propose a shared-international monetary model that can be built on a regional or global scale that is closer to the definition of “micro-money” or money that only carries out a real economic activity

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Summary

Introduction

1.1 Problem of instability The most prominent and persistent problems of the global monetary system are instability and imbalances. The organic model uses an auto-balancing exchange rate system that follows the economic fundamentals of each member country so that it does not cause fluctuations on one side and does not cause an asymmetric shock and external imbalances on the other side. Countries that join the organic model extend their national currencies as much as they need for international transactions between them. Excessive use of OGC for domestic transactions is detrimental to the country itself because it will reduce the use of national currencies, while excessive use of OGC to import or for international transfers is not possible because the autobalancing exchange rate system always balances the external balance, as will be explained later This (circulation) control system is called the “direct control”. Section 7.4): MGlobal 1⁄4 E:MLocal if PILocal 1⁄4 PIGlobal

E: Exchange rate MGlobal
Findings
Conclusion

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