Dr M moots currency backed by gold

Prime Minister Dr Mahathir Mohamad speaks at the 25th International Conference on The Future of Asia in Tokyo today. (Bernama pic)

TOKYO: Prime Minister Dr Mahathir Mohamad says Malaysia is proposing a new currency based on gold, as this would be more stable than the current currency trading which is manipulative.

He said the precious metal could be used to evaluate import and export activities among the East Asian countries.

“We can make settlements using that (new) currency (using gold). That currency must relate to the local currency as to the exchange rate, and that is something that can be related to the performance of that country.

“That way we know how much we owe and how much we have to pay in the special currency of East Asia,” he said during a dialogue session at the 25th International Conference on The Future of Asia (Nikkei Conference) here today.

Mahathir arrived in Tokyo last night for a three-day working visit.

He said the new currency could also be extended to countries outside the East Asian region.

Currently, he said, the global market is tied to the US dollar, which gives room for the currency to be manipulated.

“Just because that one country is affected, there is infection to the other countries. Malaysia was very stable way back in 1997… but because of the problems that occurred in Thailand (during the Asian financial crisis), they said we must peg the Malaysian currency also.

“What happened? The currency traders sold the Malaysian currency down and the value of Malaysian currency depreciated.

“It is not even the money that they have. They never had any Malaysian currency but nevertheless they were able to sell huge quantities of Malaysian currency and when it is depressed, of course they can buy and sell it at a higher price when it comes up,” he added.

“Currency trading is not something that is healthy because it is not about the (economic) performance of countries but about manipulation.

“Anything that you have in oversupply, we will lose value. Anything that is short of supply will increase in value so they sell huge quantities of money they don’t have, and because the amount is so big, there is depression of the value.”

Mahathir said if countries are downgraded or upgraded, it should be by an uncommitted international forum, not a country.

Here, he hit out at the US for “labelling” other countries.

“The US is fond of labelling that country as no good, this country as no good, and telling countries about ways to conduct their businesses.

“You 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.”

Asked if the Japanese yen or Chinese yuan could be used as the common currency in Asia, Mahathir replied: “If we try to promote our own currency, there will be conflict.

“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 trade only, then there will be stability.

“But trying to promote the yen or the yuan, that is not the way to go.”