Malaysian Prime Minister Mahathir Mohamad once again called for the creation of a supranational gold currency. «In the Far East, if we want to come together, we have to start with a common trade currency, not just for local use, but for trade regulation. At present, we rely on the US dollar, but it is unstable. Therefore, the currency we propose should be based on gold because gold is much more stable,» Mahathir said.
It is worth noting that during his previous tenure as Prime Minister (1981-2003), he advocated a similar initiative that addressed the entire Islamic world. At that time, the Malaysian leader proposed the creation of an Islamic common market and a unified Islamic currency — the gold dinar and silver dirham.
For understandable reasons, the initiative was not only not supported by the despotic and colonial regimes ruling Muslim countries, but also faced serious opposition from the banking lobby in Malaysia, which Mahathir was unable or unwilling to overcome. Nevertheless, the international initiative group of Muslims known as «Murabitun» that came to Malaysia to support Mahathir managed to find the necessary support from the Sultan of one of the Malaysian states (the most Islamicized one) — Kelantan.
Few people know this, but the result was the creation of a space in the Islamic world where gold dinars and silver dirhams, minted by the local sultan, became a local currency used not only for trade but also for collecting zakat and paying salaries to government officials. Perhaps this is what Mahathir means when he says that a larger solution is now needed, not just a local one. However, this time he is not proposing it to the entire Islamic world, but to Arab and other regimes within it, which are unlikely to be realistically influenced, unlike the compact region that is becoming the center of gravity of the world economy, a significant part of whose territory and population is Muslim.
Another interesting question that arises in connection with Mahathir’s statement is what currency he had in mind. Many commentators, unable to think beyond the cliché of fiat money (so-called paper money printed by central banks), rushed to write that Mahathir was calling for the creation of a new currency based on the gold standard. And since this implies the creation of a common central bank, it seems unrealistic. However, if you read Mahathir’s words carefully, it is clear that he is not specifically talking about the gold standard, although he may have it in mind. He is talking about a currency based on gold, which, given Malaysia’s own experience, could mean the introduction of gold coins into circulation.
Such plans will require considerable effort to implement and overcome the opposition of many opponents. The main question in this regard is not the suitability of the Malaysian leader, which «financial analysts» question, forgetting that it was during his rule that Malaysia became one of the «tigers of Southeast Asia». The problem is whether it is within his capabilities, given his 84 years of age. After all, his return to power against the backdrop of crisis and protests in the country was seen by many as a miracle, and he himself has said that after bringing basic order to the country, he does not intend to stay in power and will hand it over to the young generation of Malaysian politicians.
Will they continue Mahathir’s initiatives, or will the idea simply fade into political oblivion with him?