This paper presents a practical strategy for implementing the gold standard, from an Islamic perspective, in an economy that wishes to return to the gold standard. The strategy seeks to introduce Islamic finance as prerequisite for a lasting gold standard. Islamic finance shuns interest-based debt contracts; establishes 100-percent reserve money; and promotes a risk-sharing equity-based investment banking system. Monetized fiscal deficits, labor unions and vested-interest financial groups that require inflation as a means for appropriating resources have to be precluded. The paper argues that a return to the gold standard is a political decision and is technically simple to implement. There are no conditions on the amount of gold required for an economy to operate a gold standard. The country has to assimilate foreign exchange to gold; it has to lift all restrictions on gold trade; stabilize its exchange rate in relation to gold; allow the circulation of gold coins defined in terms of weights and fineness; and secure a 100-percent gold reserve for further currency emission.
