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(Kitco News) –
The government of Malaysia is actively exploring the idea of using the gold dinar as a reserve currency, the country’s leader said today.
Prime Minister Datuk Seri Anwar Ibrahim told the Dewan Rakyat, Malaysia’s lower house of parliament, that the use of the gold-backed currency will be discussed during an upcoming meeting on Islamic economics and finance to be held in December.
“We want to start it [the use of gold dinar], despite limited conditions,” he said. “If we can get between five and six per cent with Islamic countries [using dinar], it would be a positive start as it provides strength and reduces dependency on the U.S. dollar.”
The gold dinar is a medieval Islamic gold coin first issued by Caliph Abd al-Malik ibn Marwan in 696–697 CE. The weight of the traditional dinar is 1 mithqal, equal to 4.25 grams or 0.137 troy ounces. At current prices, this would peg the dinar’s value at $263.38.
Anwar made the comments during the Prime Minister’s Question Period earlier on Tuesday. He was responding to a follow-up question from Member of Parliament Ku Abdul Rahman Ku Ismail, who had asked about the possible use of the gold dinar, and whether it would encounter resistance from countries using the U.S. dollar.
“As I have mentioned earlier, our trading with China using ringgit and renminbi is at 25 per cent,” Anwar replied, referring to the national currencies of Malaysia and China, respectively. His comments signaled an acknowledgement that countries like Malaysia are already moving away from the U.S. dollar and toward other currencies and payment instruments.
Anwar added that the use of the gold dinar gives countries another alternative, which would strengthen the domestic economies of each country that adopts it.
“Islamic countries are familiar with the dinar,” he said. “Furthermore, with growth exceeding $1 trillion in the halal industry, other countries are well-informed about the position of the dinar.”
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