At first, Muslims used gold and silver by weight for trading, and the dinar and dirhams they used were originally made by the Persians. However, the first dated coins that can be assigned to the Muslims were copies of silver dirhams of the Sassanian Yezdigird III, with an Arabic inscription in the obverse margins reading "in the Name of Allah". This practice of writing the name of Allah and parts of the Qur'an on coins became a custom in all mints made by Muslims.
Under the coin standard of Khalif Umar Ibn al-Khattab, 10 dirhams weighed the same as 7 dinars (mithqals). In 695 CE, Khalifah Abdalmalik ordered Al-Hajjaj to mint the first dirhams, officially establishing the standard of Umar Ibn al-Khattab. He also ordered that all coins be stamped with the sentence "Allah is Unique, Allah is Eternal" and replaced human figures and animals with letters.
Throughout Islamic history, the islamic mint - dinar and dirham were both round, and the writing was stamped in concentric circles. One side featured the "tahlil" and "tahmid" (la ilaha ill'Allah and Alhamdulillah), while the other side showed the name of the Amir and the date. Later, blessings on the Prophet salla'llahu alayhi wa sallam and sometimes ayats of the Qur'an were introduced.
Gold and silver mints - coins were official currency until the fall of the Khilafah, after which dozens of different paper currencies were created in postcolonial national states.
The Qur'an prohibits entrusting wealth to non-Muslims, and taking a non-Muslim as a partner outside Dar al-Islam is restricted. Islamic Law does not permit the use of a promise of payment as a medium of exchange. This is because paper money is a promise of payment, and trusting the issuers while they hold the payment (our property) outside our jurisdiction can lead to default and cheating of Muslims.
Abu Bakr ibn Abi Maryam reported that he heard the Messenger of Allah, may Allah bless him and grant him peace, say: A time is certainly coming over mankind in which there will be nothing [left] which will be of use save a dinar (gold) and a dirham (silver).
[Musnad of Imam Ahmad ibn Hanbal]