1. For a long time now Malaysians have been questioning why we must use the United States' Dollar for international trade, why we cannot use a dinar or any other currency. But Malaysians are not supposed to know anything about money, about finance. So nobody listens.
2. Now it is the United Nations which is saying that its member countries should agree on the creation of a global reserve bank to issue a new currency and to monitor the national exchange rates of its members, according to Bloomberg reporting on the Geneva-based UN Conference on Trade and Development.
3. The report said that China, Brazil and Russia this year called for a replacement of the Dollar as the main reserve currency after the financial crisis sparked by the collapse of the mortgage market led to the worst global recession since World War II.
4. The United States as the whole world knows is existing on unlimited loans by the rest of the world. US Dollar bonds are bought by every country in the belief that they would represent their reserves. Such bonds seem to be available all the time, unlike bonds issued by other countries which are for specific amounts.
5. If the US Dollar is not used for trade payments and loans, then there would be no demand for it. Obviously this would cause the US Dollar to be devalued. When it is devalued all the countries holding Dollar bonds would lose their reserves very substantially. So the countries with huge Dollar reserves would resist any move that would reduce the value of their reserves.
6. The US itself would resist as devaluation of the US Dollar would make it a very poor country. It cannot then remain the imperial power that it is now.
7. If the US Dollar is not to be used for trade and reserves, what currency should replace it? The Euro and the Yen seems suitable but it is doubtful if either Europe or Japan would want their currencies to be used the way we use the Dollar now.
8. The suggestion that a new currency be issued by a new global reserve bank is very attractive. Some people would like to use gold dinars.
9. The actual name of the currency is not important but backing by gold is important. If the new currency is used only for trade settlements (just as the US Dollar is now used) the proposal would be quite feasible.
10. Whatever, the world needs to discuss this proposal seriously. As the report says, a new currency would help to protect the emerging market from "confidence game" of financial speculation. And Malaysia falls into the category of emerging markets.
11. Maybe Malaysia might embolden itself to champion this proposal. Maybe!
TUN DR.MAHATHIR MOHAMAD