-->Malaysia backs Iran proposal to set up international gold dinar

Kuala Lumpur, Oct 24, IRNA --
Prime Minister Dr Mahathir Mohamad has agreed with Iran proposal
to set up a secretariat in Malaysia to use the gold dinar among
central banks of world Muslim countries.

"Iran is keen, so we might do this with them," he told newsmen
after closing the International Seminar on Gold Dinar in Multilateral
Trades organized by the Malaysia's Institute of Islamic Understanding
(Ikim).
Dr Mahathir said he would inform the Cabinet of the proposal and
if there was agreement, Bank Negara (Central Bank) would be informed.
Earlier during a question-and-answer session, Iranian central
banker Bijan Latif had suggested that Malaysia set up a secretariat
here to provide information on the concept.
Dr Mahathir had responded that it was a good idea to have a
secretariat here to facilitate communication with central banks of
other Muslim countries to explain the concept and examine the laws to
allow the use of the gold dinar.
In the session, Ikim chairman Ahmad Sarji Abdul Hamid outlined
some of the proposals and issues that needed to be examined before
implementation.
He said there was an existing prohibition by the International
Monetary Fund (IMF) on the use of gold as a medium of payment and the
proposed gold dinar would be a potential violation of the rule.
He said there was also a need to study the effects of using a dual
currency system tool and whether this would impede the growth of the
gold dinar.
Dr Mahathir later told the press conference these were problems
that should be looked at and resolved.
He said potential countries to use the dinar for trading were
Muslim countries with a stable economy.
In his speech, he said countries should not be too ambitious in
launching the gold dinar for multilateral trade at one go, suggesting
instead they start by pairing off two countries.
He believed anarchy in the international financial regime would
remain because it benefited the rich and powerful and to"protect
ourselves, we must evolve our own payment system, our own trading
currency."
He said the gold dinar could be the currency for trade between
nations and if all trade items were valued against gold, then there
would be no problem with exchange rate.
Dr Mahathir said while gold price could also be manipulated, this
was not as easily done as the US dollar or other currencies.
"No one can sell gold at below market price because he just will
not be able to deliver when called upon to do so. Short selling will
be very difficult, if not impossible," he said.
He stressed the dinar was intended exclusively for international
trade and was not to be used as currency for daily transactions in the
domestic market because it was heavy and cumbersome to carry.
BN/BH/RR
End