An idea to establish an Asian Monetary Fund has caught the
attention of the Chinese leadership, the head of the Malaysian
government revealed. The prime minister believes there is no reason for
his country, which is hurting from a strong U.S. dollar, to remain
dependent on the greenback.
Malaysia Prepares to Trade With China in National Currencies, Limit Reliance on Dollar
China is open to talks with Malaysia on a decades old proposal to set
up an Asian Monetary Fund that can reduce reliance on the U.S.
currency, Malaysian Prime Minister Anwar Ibrahim announced, quoted by
Bloomberg.
Anwar, who also serves as Malaysia’s minister of finance, pitched the idea at the Boao Forum
last week when he emphasized on the need to cut dependence on the
International Monetary Fund (IMF) as well. On Tuesday, he told Malaysian
lawmakers:
When I had a meeting with President Xi Jinping, he
immediately said, ‘I refer to Anwar’s proposal on the Asian Monetary
Fund,’ and he welcomed discussions.
The head of the Malaysian government was reporting on the results of
his recent state visit to the People’s Republic. He also said that
Malaysia’s central bank is already working on enabling the two nations
to start trading in their respective national fiats, ringgit and
renminbi.
An expensive U.S. dollar has been weakening currencies in the region
and creating headaches for nations like Malaysia, which is a net
importer of food items, the report remarks. Last fall, the ringgit,
among other currencies, saw multi-decade lows against the greenback.
Anwar Ibrahim reminded that he initially circulated the proposal for
an Asian Monetary Fund when he first took the job of finance minister in
the 1990s. At the time, the idea did not gain sufficient traction as
the U.S. dollar was seen as strong, he admitted, while pointing out:
But now with the strength of the economies in China,
Japan and others, I think we should discuss this — at least consider an
Asian Monetary Fund, and, secondly, the use of our respective
currencies.
Anwar’s statements come after the finance ministers and central bank
governors of the Association of Southeast Asian Nations (ASEAN), of
which Malaysia is a member, discussed decreasing their countries’
dependence on western currencies like the dollar. During a meeting in Indonesia at the end of March, they also explored ways to promote the use of local currencies in trade settlements.
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