Muslim leaders to study unified currency seriously

Dr Mahathir says the use of gold dinar and barter trade will be revisited, an idea he mooted at the height of the AFC


PRIME Minister Tun Dr Mahathir Mohamad on Saturday reaffirmed a commitment to produce a common currency that can be used for trade among Muslim nations.

Dr Mahathir who has been a long-time proponent of a gold-backed currency, said the use of gold dinar and barter trade will be revisited and seriously considered among Muslim leaders. He first mooted the idea some three decades ago at the height of the Asian Financial Crisis (AFC).

“We are seriously looking into this and we hope that we will be able to find a mechanism to put it into effect,” he said at the closing ceremony of the Kuala Lumpur Summit 2019.

Speaking at the press conference later, Dr Mahathir described the US dollar as unstable and exposed to fluctuations in value to serve as an overriding international currency.

“But gold has a certain value for all countries in the world. If we use gold as a standard, we can call our currencies by whatever name, but they must relate to the value of gold in your country.

“That was proposed and I think we should study this very carefully. We are hampered today by the need to use just one currency for international trade,” he said.

Iranian President Dr Hassan Rouhani had earlier called an end to the domination of the US dollar with the suggestion of a single cryptocurrency that can be used among Muslim countries.

Rouhani said Muslim nations can create special mechanisms for banking and financial cooperation to minimise their reliance on the US. He said the dollarisation of global economies have granted power to the US to impose illegitimate demands and threat other nations with sanctions.

The world’s largest economy continues to impose sanctions against Iran, banning Iranian products ranging from healthcare items to military equipment and aircraft.

The idea of de-dollarisation is not limited to just the Muslim world. Apart from fear of unwarranted sanctions, many including American economist Jeffrey Sachs have long predicted the demise of the US dollar as the superpower’s share of the global economy, which has deteriorated to about 15% this year from 21.6% in 1980, based on estimates from the International Monetary Fund.

In comparison, China’s economy now accounts for over 19% of the world economy, while the European Union is at 16%.

This raises questions whether the US will continue to have the economic sway to support the prevalent use of the dollar, with Sachs predicting a shift from a dollar-based settlements system to a multi-currency settlement system involving the yuan and euro.

Dr Mahathir’s idea to create a currency based on gold dates back to the AFC in the late 1990s when many Asian currencies collapsed. He last proposed the idea of using gold as a pan-Asian currency at the International Conference on the Future of Asia in Tokyo in June.