Islamic finance is characterised by a number of doctrinal restrictions, notably including the prohibition of interest. Speculation, particularly in the sense of a transaction in which uncertainty will result in one party gaining at the expense of the other, is also discouraged. Profit should be earned through cooperative participation in the risk of a real investment. In the case of interest, the requirement for a fixed profit on money, even in the periodic form of variable interest, is considered to be in breach of this principle. ‘Zero sum’ speculation is a transaction of opposing rather than cooperative interests, and no real wealth is generated to justify profit. Another significant restriction is that un-Islamic or unethical investment is prohibited. Islamic finance would not normally support a business based on alcohol or gambling, for example.

The conventional monetary system is not well suited to maintaining these principles. Fiat money does not refer to any specific financial value, and its claim to any other standard of value is extremely dubious. A unit of modern currency will normally lose value through time, however that value might be defined, and more generally its future value is unknowable. It is stable only in a nominal sense, and as a result of ‘stickiness’ in the prices associated with it. This means that interest is necessary simply to maintain some kind of meaningful value. It also means that any transaction will be a kind of speculation, as unknown future values will favour one party or the other.

From this perspective, the global dollar may be the only modern currency suitable for Islamic finance, as it is the only unit defined by a financial standard of value. The Global Reserve System effectively eliminates the ‘time value of money’, making the main component of interest redundant; global dollar debts can be offered on a simple management fee basis. It also ensures stable values by using international investment opportunity cost as its standard. The value of an investment is not increasing or decreasing in a meaningful economic sense if it does not gain or lose in these terms. The only useful way to judge speculation and risk is against the wealth that we would otherwise hold, not against a nominal unit of unknown future value. Money that refers to real financial wealth provides certainty in commerce; money that refers to nothing but itself leads to noise and confusion.