Malaysia And The New Gold Currency
“Paper money is so last season!”, would say today a Malaysian who lives in the Kelantan state and who saw how, little by little, a new currency emerged on the marketplace. And that is gold. Kelantan thus became the first state in the last 100 of years to introduce gold and silver coins as official currencies, replacing the national ringgit. And this is not considered to be an experiment: this medium of exchange has been popular for 1400 years.
Once used by the Ottoman Empire, the traditional dinar and dirham were replaced by the gold dinar and the silver dirham. This new monetary system introduced by the state government of Kelantan is standardized and available in a wide array of denominations: from half a dinar to eight dinars and from one dirham to twenty. The coins are minted to a well-established weight and purity, similar to a gold bullion’s coin.
But the politicians and the economists were not the only ones to have supported this new measure. Kelantan, just like Malaysia, is an Islamic state and Islamic education supports this medium of exchange, which makes use of coins with intrinsic value, rather than the paper system. This novelty can also be seen like a measure against Capitalism and an attempt of Islamic governors to revive the Islamic social and economic system, the way it is explained in the Quran and the Hadith, which are fundamental Islamic texts.
However, apart from the traditional dimension of this new currency system, it has also been conceived as a measure to protect the economic system from the fluctuation in value of foreign currencies, like the US dollar for example. In addition to that, the new scheme will help pay political dividends for the state government, which is led by the PAS, party trying to hold control on the Kelantan state in the detriment of the national parliament. It is well known that gold is the safest investment, and especially during times of financial unrest. Be it gold bullion coins or just a new national currency, gold will always be a measure of protection against the economic instability.
As regarding the social reaction, the Kelantan population has already embraced this new currency system. More than 1000 shops in the state accept the new currency and the local government is considering paying salaries in the same way. Even though the effect on the marketplace is not yet obvious, should it be applied for the rest of the Islamic world, it will have a great impact. For the moment, the only winner is gold: the demand will increase, and with it prices.
When deciding to invest in gold have into consideration buying gold bullion coins, which have 99.9% purity.
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