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31 May, 2019 03:40

‘Gold is more stable’: Malaysia needles US with proposal for pan-Asian bullion-backed currency

‘Gold is more stable’: Malaysia needles US with proposal for pan-Asian bullion-backed currency

Malaysian PM Mahathir Mohamad has floated the idea of creating a gold-backed common trading currency for all of East Asia, slamming regional currency exchange as “manipulative” and criticizing the US’s heavy-handed foreign policy.

In the Far East, if you want to come together, we should start with a common trading currency, not to be used locally but for the purpose of settling of trade,” Mahathir said at the Nikkei Future of Asia conference in Japan, suggesting the currency be “based on gold because gold is much more stable” and warning that promoting any one country’s currency over others would result in conflict. Exchange rates would be based on the country’s economic performance and not subject to the volatility of forex markets. 

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Currency trading is not something that is healthy because it is not about the performance of countries but about manipulation,” Mahathir added. The gold-backed currency would not be used within any one country, but would help protect regional trading from predatory speculators - and from the vicissitudes of the dollar, which he said unfairly held the rest of the world hostage.

You [the US] are not democratic. That is not for any single power to decide. If you want to live in a united world, a stable world, we must resort to sustainability through agreement between all nations that have a stake in that problem.” Eventually, he said, the currency could be extended to other countries outside Asia.

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Earlier this week, US President Donald Trump warned Malaysia that it could be placed on the US Treasury’s list of “currency manipulators” and required close scrutiny, though Malaysia’s central bank retorted that it maintains a floating exchange rate and strong external balance. During the 1997 financial crisis, the bank pegged the ringgit to the dollar and imposed capital controls, but those measures were discontinued in 2005.

Mahathir is a long-time critic of the status quo in currency trading. He blames billionaire financier George Soros for triggering the 1997 Asian financial crisis by betting against the ringgit and baht and has accused the financier of attempting to “colonize” Malaysia through his network of NGOs, claiming his end goal is “regime change.” 

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Libyan leader Muammar Gaddafi proposed a pan-African gold dinar that would be used to sell the country’s oil on the world market in 2009, less than two years before his government fell to a NATO-backed regime change operation that has left the once-prosperous nation a conflict-ridden warzone. One of the ‘moderate’ rebels’ first actions upon brutally murdering Gaddafi was to create a central bank to replace the state-owned monetary authority that had previously managed Libya’s wealth. The US has historically not taken kindly to countries that attempted to trade oil in non-dollar currencies, as Iraq’s Saddam Hussein can attest – or could, if he hadn’t been regime-changed as well. Syria, too, dropped its peg to the dollar in 2007, not long before the West went from awarding Bashar al-Assad the French medal of honor to declaring him a bloodthirsty monster.

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