Malaysia Wants To Introduce Gold Dinar To Distance Itself From Dollar
In December, economic ministers from the Islamic world will meet in Kuala Lumpur, the capital of Malaysia. One of the central topics of the negotiations will be the return to the so-called “gold dinar” in bilateral and multilateral trade between Muslim countries. The gold dinar could become a kind of reserve currency, which, of course, would not undermine the hegemony of the dollar, but could reduce the dollar’s influence on the economies of the countries of the Global South.
Speaking to members of the Dewan Rakyat, Malaysia’s lower house of parliament, this Southeast Asian nation’s Prime Minister Anwar Ibrahim said that “switching to the gold dinar, which could initially cover 5-6% of Malaysia’s trade with other countries in the Islamic world, would be a great start that will strengthen Malaysia’s economy and reduce its dependence on the dollar.” Ibrahim emphasized that Islamic countries have known the gold dinar “for centuries,” and the global halal industry has now exceeded $1 billion.
This is not the first time Malaysia has raised the issue of the gold dinar. The idea was initially discussed by former Malaysian Prime Minister Mahathir Mohamad after the 1997 Asian financial crisis that hit very hard many developing countries, including Malaysia, Indonesia, Bangladesh, Burma, and Thailand. Mohamad said at the time that “coins will never cause their owner the same problems as banknotes.” As precious metals with intrinsic value, gold and silver are more resistant to market fluctuations and devaluations compared to the US dollar – an argument that Mohamad even presented to the Organization of the Islamic Conference as a “tool to combat Western hegemony.”
The issue was raised again in 2011, with proponents of the Islamic gold dinar citing as evidence the credit crisis, also known as the “credit crunch,” and the subsequent breakneck rise in gold prices on world markets.
Currently, the gold dinar is used in Malaysia for investment as a safe haven and also as a legal instrument for paying certain Islamic taxes. Stability is the main advantage of the gold dinar, like any other currency pegged to this precious metal. However, during the heated discussions about the gold dinar and during the debate over the introduction of a single currency for the BRICS countries, it became clear that the main problem lies in the field of global politics and concerns not so much US resistance as the inability by groups of countries – Islamic or BRICS – to work out a compromise and come to an agreement among themselves.
