The gold dinar of the Arabs rivaled the Byzantine solidus as the preferred international currency from the eighth century until the thirteenth century.
By the middle of the seventh century the Arabs had wrested Syria and Egypt from the Byzantine Empire, and had conquered Iran and Iraq. Within another 50 years the Muslim empire stretched from Spain and Northern Africa to India. The victorious Arabs fell heir to the Byzantine gold coinage in the west, the principle coin of which was the solidus, and to the Iranian silver coinage, the principle coin of which was the drachm, named after the Greek drachma.
The first generation of Arabs contented themselves with the existing monetary standards and coinage, but in a.d. 696 the caliph Abd al-Malik established a uniquely Islamic coinage. Its principle coin was called the gold dinar because the Arabs had called the Byzantine solidus a dinar. The term dinar seems to have stemmed from the word denarius, referring to a silver coin in ancient Rome. The gold dinar was equal to 4.25 grams of gold, compared to 4.55 grams of gold content in the Byzantine solidus.
Typical of the age, a religious dispute seems to have sparked the decision to establish an Islamic monetary system. Apparently, the caliph Abd al-Malik received word that the Byzantines were importing papyrus decorated in Egypt with a Greek inscription reading “Father, Son, and Holy Ghost.” Abd al-Malik then sent written instructions that the words “Allah is witness that there is no God but Allah” replace the words “Father, Son, and Holy Ghost.” When the Byzantine emperor learned of these developments he sent word to Abd al-Malik, pointedly observing that the Byzantines dominated world coinage. He threatened that soon Byzantine coins would bear messages insulting to the prophet Mohammed unless the Christian inscription was restored to the Egyptian papyrus. This threat provoked the Arabs to erect their own mint, and begin striking their own coinage.
The new Arab dinar bore an inscription on one side affirming the unity and uniqueness of God, and an inscription on the reverse side denying the Christian doctrine of the Trinity. Islam frowned on the use of images of rulers, deities, or animals within a religious context, which in Islam encompassed the coinage.
Plans for an Arab coinage were left in the hands of Al-Hajjaj bin Yusuf, governor of Iran and Iraq. He apparently established the first Arab mint in Wasit in a.d. 702–703. The government tattooed moneyers and moneychangers employed at the mint, and closely supervised them to guard against any sort of fraud. Mint employees caught in fraudulent acts had their hands cut off as punishment. On advice of Al-Hajjaj bin Yusuf, Abd al-Malik ordered that old coins be melted down and minted into Islamic coins, that the new coins be used throughout Islam, and that anyone refusing to accept the new coinage receive the death penalty.
Between a.d. 813 and 833 the caliph Al-Ma’mun reformed the Arab coinage, providing for greater uniformity in the coinage from different parts of the Muslim empire. The coin types of his reforms lasted until the eleventh century among the secular rulers within the Abbasid caliphate, and until the mid-thirteenth century in Iran and Iraq. By the end of the thirteenth century the gold coinage of Venice and Florence began to displace the Byzantine and Muslim coinage systems.