Sister, you have referred to only one kind of riba, there are others too. Most of us hailing from villages have their lands given on theka/ patta (lease) etc. Do you know it is haram despite the fact that we pay zakat over it?
Please know that circulation of money is not the precept behind prohibition of riba. Its getting more than your right (and zulm etc). This circulation of money story is only found in basic Islamiat books for the sake of making a heading.
Secondly, I interpreted as HOW an Islamic financial system would exist so I proposed a mechanism. Only the examiner can tell what he meant.
Coming to abolition of paper money, do government- government, government- international financial institution transactions use credit cards? Gold has been the most stable currency since primitive times. There is a reason why people like Ron Paul campaign for gold as money standard (refer to his book "A Case for Gold"). Above all, our
Prophet P.B.U.H is reported to have said that Allah has created gold and silver to be the natural money.
As to establishment of a union consisting to willing member countries, what is so absurd about it? EU has same currency. Without a union, you cannot put an end to paper money alone (Gaddafi did it and invited the wrath upon him) and without abolition of paper money, devaluation of currency will not let you establish an interest-free economic system. I hope it makes sense now.
I want to stash money in bank account for the sake of security. I do not want to earn anything from it and I am afraid of losses that any such investment could entail. So I would just pay them nominal service charges and deposit it in amanah account but banks will not be able to invest it and I wont get anything over and above what I initially deposited.
My brother wants to invest so puts his money in investment account and would be sharing profits and losses according to his share. I hope I have elaborated it now.