ISLAMIC TWISTER BLOWS INTO MALAYSIA'S CURRENCY STORM: As ringgit slumps, Muslim hardliners demand return to gold standard

KUALA LUMPUR - Malaysia must return to a monetary system backed by gold and silver as it is mandated in Islam, the local chapter of global hardline Islamist group Hizbut Tahrir said amid the dropping value of the ringgit.

According to the group, a reliance on capitalism and the fiat money system allegedly pioneered by the “infidelic” United States has trapped Malaysia in severe, prolonged and cyclical phases of regional currency crises.

“Based on scriptures, gold and silver back-up is an obligation. Meanwhile, realistically, the use of gold and silver standards are very stable because it combines the intrinsic and nominal values at once,” the group wrote in its weekly newsletter distributed to mosques today.

Meanwhile, Bloomberg news reported today that the ringgit extended losses to a ninth week on concern a slump in oil prices will hurt government efforts to reduce the fiscal deficit.

The ringgit has declined 6.8 per cent since Oct 10, the worst-performance in Asia, as the drop in crude threatens to crimp revenue in the petroleum-exporting nation, it added.

Hizbut Tahrir also claimed that the Islamic currency would not need supervision and administration of any national or global body, and can run naturally.

“The value of gold and silver are always stable until there is no space for inflation to occur in a country’s economy,” it claimed.

The group also alleged that when it finally establishes a caliphate in Malaysia soon, it will task a Baitulmal to take responsibility of the revenue and expenditure of the country, in addition to abolishing fiat money, “usury” economics, speculation, futures market and stock exchanges.

Baitulmal, from an Arabic word that literally means “house of wealth”, refers to a treasury institution during ancient Islamic caliphates that also collects zakat (alms) from Muslims and taxes from non-Muslims, and redistributes the money to the needy.

The role is now taken by modern Baitulmal institutions operated by religious authorities in Malaysia.

PAS-ruled Kelantan has sought to reintroduce the use of gold dinar and silver dirham currency, but the plan has failed to catch on due to the lack or regulation and backing from traders.

Another proponent is former prime minister Tun Dr Mahathir Mohamad, who helmed the country during the 1997 Asian financial crisis. - Mail Mail