The Islamic State group has issued its own currency that would be its standard for trade transactions in areas it controls in Syria and Iraq, experts and locals in both countries reported.
The “gold dinar,” a reportedly 4.25-gram, 21-carat gold coin, is aimed at replacing the Syrian pound, Iraqi dinar and U.S. dollar in the market.
Oil traders have been instructed by IS to deal in the new currency while conducting business in IS-held areas, activists in Deir Ezzor, Syria, said.
Since its rise in 2014, IS has heavily relied on oil sales as its major source of revenue.
“This is an attempt by IS for legitimacy,” said Syrian economist Khorshid Alika. “They want to tell the world that their entity can impose its economy on the international market.”
Locals fear that the use of the gold coins will affect them immediately, causing hyperinflation in the local economy.
“Prices [of commodities] have already skyrocketed since Daesh [IS] announced the use of its currency,” said Hussam Eisa of Raqqa Is Being Slaughtered Silently, a group that reports on IS abuses in Syria. He told VOA that market traders have been using the gold currency for two weeks.
But analysts believe use of gold currency by IS will not strengthen its economy, nor will it affect regional or global economies.
In a 2015 video, IS stated that its gold currency would replace the use of the U.S. dollar in the areas it controls and that it would cause the collapse of the U.S. dollar. Prior to that, the group introduced print currency but failed to impose it on the market.
Alika said the terror group would face obstacles, such as its need for large quantities of gold to produce coins.
“IS runs a war economy and its ability to buy raw gold largely depends on its territorial gains,” he told VOA.
In the past few months, the group has suffered several defeats in Syria and Iraq, with large territories being lost to Iraqi forces and U.S.-backed Syrian forces.