Let's have common East Asian currency based on gold, says Dr M

Malaysia is proposing a new combined currency based on gold, as it is more stable than "manipulative" currency trading, says Prime Minister Dr Mahathir Mohamad.

Mahathir said by using the precious metal as a standard, East Asian countries could use it to evaluate the export and import activities among themselves.

“We can make a settlement using that (new) currency. 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, how much we have to pay in the special currency of East Asia,” he said during a dialogue session at the 'Future of Asia' conference in Tokyo today.

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

He first proposed a common regional currency more than 20 years ago, during the Asian financial crisis of 1997.

The prime minister said the new currency could also be extended to the rest of the country, outside the East Asian region.

He noted that currently the global market is tied to the US dollar, opening 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 problem 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 the 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 then, of course, they can buy and sell it at a higher price when it comes up,” he explained.

“When it is depressed, of course, you can buy and sell it at a higher price when it comes up. This currency trading is not something that is healthy because it is not about the (economic) performance of countries, but it is about manipulation.

“Anything that you have in oversupply we will lose value. Anything that is short of supply will increase 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 elaborated that if countries are to be downgraded or upgraded, it should be done by some international uncommitted forum, and not by any country.

On this note, he slammed the United States for labelling countries.

“The US is fond of labelling that country is no good, this country is no good and telling countries on 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, 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 trying 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 is not the way to go,” he added.

- Bernama