The Analysis of Monetary Policy in the Period of the Prophet Muhammad (PBUH) and the Implementation in Indonesia

Abstract

Monetary system throughout the ages have undergone many developments of the financial system is the most widely performed empirical and historical studies when compared with other economic disciplines. The financial system at the time of the Prophet used bimetallic standard of gold and silver (dirham and dinar) as both are legal tender and circulate in the community. The exchange value of gold and silver at the time of the Prophet is relatively stable dinar exchange rate of 1:10. However, the stability of the exchange rate has been impaired because of the disequilibrium between supply and demand. For example, during the reign of the Umayyad (41 / 662-132 / 750) the ratio between the dinar-dirham exchange rates is 1: 12. Based on the background of the problem, then the problem formulation is organized into the following questions: how is monetary policy at the time of the Prophet? How is the monetary policy in Indonesia? Is monetary policy at the time of the Prophet can be applied in Indonesia? The aim of this research to know how the monetary policy that existed during the reign of the Prophet and to analyze the monetary policy that is applied in Indonesia. In addition, it is to analyze whether the monetary policy that has existed in the past apostles can be applied also in Indonesia. This study uses descriptive qualitative analysis, because this method in the perspective to describe and analyze phenomena monetary policy from the period of the Prophet and that is happening now. To help the process of this study the author uses literature study of the Book of monetary policy obtained through primary data and secondary data (books related to the problem being investigated. The results showed that the concept of monetary policy is applied at the time of the Prophet, namely the use of dinar can avoid inflation because gold has stable properties and not in depreciation as a paper currency that is used now even though monetary policy as applying dinar and dirham cannot be applied in Indonesia, whereas conventional monetary based on the interest rate so as to encourage people to have a goal to speculate ,