News

The Danish National Bank is fighting to save the Danish krone. Today on the 5th of February, it lowered the interest rate to -0.75%, which is not only an all-time low, but the lowest in the world together with Switzerland, and it seems as if they might have to go even lower. At the same time, the National Bank is increasing the Euro reserves in a battle against speculators who are buying the krone.
If the battle against speculators is lost, it will cause a devastating blow to Danish economy.

Comment

In Europe, there is an almost permanent struggle to escape the financial crisis, and the European Central Bank (EBC) has recently tried to devaluate the Euro and decrease the interest rate to get the wheels of the economy running. This should have a positive impact on the members of the monetary union, but can be damaging to other countries, which Denmark is sensing exactly these days.
When many European countries changed to the Euro, Denmark kept its national currency, the krone, but made a fixed exchange rate with the Euro and this is now potentially dangerous. Fixing the Danish krone to the Euro means that the Danish National Bank has to devaluate the krone with the Euro by buying Euro and decreasing the interest rate. This, and the fact that the Danish economy is relatively stable, has been spotted by large investors and currency speculators who are now buying the Danish krone in huge amounts. This makes the currency rate increase and the battle of the krone is raging these days.

If the speculators win, the National Bank will have to leave its fixed exchange rate with the Euro, which recently happened to the Switzer Franc. In this case, it would mean profit for the speculators, but a strong currency these days would also mean a decrease in competitive edge, loss of export, loss of production and a rise in unemployment, and eventually an even worse situation than now.
Problems like these are inherent in the capitalist economic system. All their attempts to get out of the crisis are doomed to fail, since they are based on the same flawed system. They fail, or even avoid examining the reasons for the crisis and focus, on the symptoms instead. All this currency fluctuation and the results should provoke a reconsideration of alternatives to this unstable fiat paper money. The only way to get a stable currency is to return to the Gold Standard.

The only system of governance that unequivocally insists upon the Gold Standard is the Islamic economy as applied by the Islamic State (Caliphate). In Islam, a dual metallic standard with gold and silver is applied. No Fiat money will be issued by the state, and any paper currency must be 100% backed. This is just part of the Islamic economic system, which is the only system that has a correct view on economy and the relations between ownership, individuals and state. It is the only system that in practice, can ensure fair distribution of wealth and at the same time ensure progress.

The current crisis and the search for solutions should not only end with an economic alternative. Since the economy is the most significant factor in the capitalistic ideology, the crisis and the flaws should even encourage people in the west to reconsider the entire basis for their view on life. Islam came as a mercy to mankind; not as a philosophical or metaphysic mercy, but a practical one as a result of the Islamic Aqeedah and systems, which can be examined and sensed by all human beings.

((قَدْ فَصَّلْنَا الْآيَاتِ لِقَوْمٍ يَفْقَهُونَ))

"We have detailed the signs for a people who understand" [Al-‘An'am, 6:98]

Written for the Central Media Office of Hizb ut Tahrir by
Junes Kock
Media Representative of Hizb ut Tahrir in Scandinavia