Malaysia to use gold dinar in trade with Islamic nations,3523,1155583-6078-0,00.html

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. 



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