Malaysia’s PM proposes new gold-based trade currency for East Asia

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Malaysia PM Mahathir Mohamad

Malaysia’s Prime Minister Mahathir Mohamad on May 30 proposed the creation of a new “special currency” for the East Asia region based on gold, replacing the existing currency trading regime as a measure to counter currency manipulation and to bring more financial stability.

Speaking at the 25th International Conference on The Future of Asia in Tokyo organised by Nikkei, he claimed that a regional currency based on gold would be more stable and said that by pegging the new currency to gold, it could be used to evaluate import and export activities among East Asian countries.

“We can make settlements using that new currency. That currency must be pegged to the local currencies as the exchange rate, which is something that can be related to a country’s performance,” he said, adding that the new currency could also be extended to countries outside East Asia.

Mahathir noted that the global market is now mainly tied to the US dollar which would make the US currency prone to manipulation.

“Just because that one country is affected, there is infection to the other countries. Malaysia was very stable way back in 1997 during the Asian financial crisis, but because of the problem occurring in Thailand, they said we must peg the Malaysian currency to the US dollar,” he recounted.

“What happened? The currency traders sold the Malaysian currency and the value of Malaysian currency depreciated. This currency trading is not something that is healthy because it is not about the economic performance of countries but it is about manipulation,” Mahatir said.

“But if we have a common currency for East Asia, a common trading currency that is not used in each country but for the purpose of settlement of trade only, then there will be stability,” he added, arguing that trying to promote the yen or the yuan instead is not the way to go because it would give Japan or China to much influence.

Earlier this week, the US added Malaysia to a watchlist of trading partners for currency practices, citing its foreign exchange intervention operations. Malaysia’s central bank has refuted the claim. In a statement on May 29, it said the Malaysian economy remained resilient, underpinned by strong economic fundamentals, including the flexibility accorded by a floating exchange rate and strong external balance.

Other countries, including Singapore, China, Germany, Japan, South Korea and Vietnam were also added to the list.

“The US is fond of labeling that certain countries are not good and telling them on ways to conduct their business,” Mahathir said, noting adding that the US was “not democratic. That is not for any single power to decide.”

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Malaysia PM Mahathir Mohamad Malaysia’s Prime Minister Mahathir Mohamad on May 30 proposed the creation of a new “special currency” for the East Asia region based on gold, replacing the existing currency trading regime as a measure to counter currency manipulation and to bring more financial stability. Speaking at the 25th International Conference on The Future of Asia in Tokyo organised by Nikkei, he claimed that a regional currency based on gold would be more stable and said that by pegging the new currency to gold, it could be used to evaluate import and export activities among East Asian countries....

Auto Draft
Malaysia PM Mahathir Mohamad

Malaysia’s Prime Minister Mahathir Mohamad on May 30 proposed the creation of a new “special currency” for the East Asia region based on gold, replacing the existing currency trading regime as a measure to counter currency manipulation and to bring more financial stability.

Speaking at the 25th International Conference on The Future of Asia in Tokyo organised by Nikkei, he claimed that a regional currency based on gold would be more stable and said that by pegging the new currency to gold, it could be used to evaluate import and export activities among East Asian countries.

“We can make settlements using that new currency. That currency must be pegged to the local currencies as the exchange rate, which is something that can be related to a country’s performance,” he said, adding that the new currency could also be extended to countries outside East Asia.

Mahathir noted that the global market is now mainly tied to the US dollar which would make the US currency prone to manipulation.

“Just because that one country is affected, there is infection to the other countries. Malaysia was very stable way back in 1997 during the Asian financial crisis, but because of the problem occurring in Thailand, they said we must peg the Malaysian currency to the US dollar,” he recounted.

“What happened? The currency traders sold the Malaysian currency and the value of Malaysian currency depreciated. This currency trading is not something that is healthy because it is not about the economic performance of countries but it is about manipulation,” Mahatir said.

“But if we have a common currency for East Asia, a common trading currency that is not used in each country but for the purpose of settlement of trade only, then there will be stability,” he added, arguing that trying to promote the yen or the yuan instead is not the way to go because it would give Japan or China to much influence.

Earlier this week, the US added Malaysia to a watchlist of trading partners for currency practices, citing its foreign exchange intervention operations. Malaysia’s central bank has refuted the claim. In a statement on May 29, it said the Malaysian economy remained resilient, underpinned by strong economic fundamentals, including the flexibility accorded by a floating exchange rate and strong external balance.

Other countries, including Singapore, China, Germany, Japan, South Korea and Vietnam were also added to the list.

“The US is fond of labeling that certain countries are not good and telling them on ways to conduct their business,” Mahathir said, noting adding that the US was “not democratic. That is not for any single power to decide.”

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