Malaysia to use gold dinar in trade with Islamic nations

KUALA LUMPUR - Malaysia expects to use gold dinars to trade with Islamic countries from mid-2003, a senior government official said Monday.

Nor Mohamed Yakcop, economic adviser to Prime Minister Mahathir Mohamad, said Malaysia was now discussing with certain Islamic nations on a new trade settlement system but did not identify the countries.

He said the gold dinar would initially be used to facilitate trade payment between two Islamic nations per transaction as part of efforts to bolster trade among Muslim nations.

Eventually, the gold dinar would be used to settle trade on a multilateral basis, involving more than two countries at any one time, he was quoted as saying by Bernama news agency.

However, Nor Mohamed said the gold dinar would not replace domestic currencies as each would continue to use their own currencies for domestic transactions.

The move would be a strong step forward to unite Muslim nations, he added.

According to Islamic law, the dinar is a specific weight of gold equivalent to 4.3 grams and its value is based on world demand for gold.

Mahathir, who is also finance minister, in March proposed that the gold dinar be used for international trade to prevent a repeat of the currency crisis which devastated Asia in 1997-1998.

The veteran Malaysian premier, who blames "greedy" currency traders for Asia's downfall in the crisis, said local gold prices would determine the exchange rate for the local currency against the dinar.

The planned usage of the gold dinar would come just a few months before Malaysia hosts the Organisation of Islamic Conference summit in October 2003.

Source:
http://www.bday.co.za/