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| Southeast Asia |
| Mahathir urges use of gold standard |
| 2010-11-22 |
| [Arab News] Malaysia's elder statesman Mahathir Mohammed, the favorite politician of the Mohammedan man in the street and former prime minister, is never far from controversy. Addressing the 5th International Shariah Scholars Forum, which was held in Kuala Lumpur recently in conjunction with the Global Islamic Finance Forum (GIFF) 2010, Mahathir in an outspoken attack stressed that the "collapse of conventional banking, finance and the monetary system has exposed their weakness and the ease with which they can be abused." At the same time, in a stark warning to Islamic banks, he bluntly advised them to avoid getting involved in unethical practices in their pursuit to compete with conventional banks. Islamic banking in its current nascent stage, he added, cannot afford any disaster at a time when the industry is trying to gain acceptance as an alternative to conventional banking. Mahathir is no stranger to Islamic finance. Although not much credit is given to this fact, it was him and his successive governments in the 1980s through to the 1990s and early 2000s that consistently supported the establishment of Malaysia's Dual Banking Model - a conventional banking system operating side-by-side with an Islamic banking system - cooperating but not interacting. Malaysia has never looked back since then. Today its Islamic financial architecture is the most developed in the world, complete with enabling legal and regulatory framework; a financial sector master plan, of which 90 percent has been implemented; accounting standards; an Islamic interbank money market (the only one in the world); a thriving government Islamic sukuk and notes issuance program; consumer protection and awareness policies and a Shariah-compliant deposit insurance scheme. In 1998 he also steered Malaysia out of the Asian financial crisis without resorting to the International Monetary Fund (IMF) with a cap in hand begging for a bail-out. The Malaysian solution vindicated Mahathir's policies because it turned to be highly successful, perhaps to the secret admiration of the IMF officials. As such, on both fronts, the wily Mahathir does know a little what he is on about. The fact that Islamic banking has not yet been abused does not mean it will never be subject to the excesses of its conventional counterpart, which so nearly brought the global financial system to collapse at the onset of the current crisis. |
| Posted by:Fred |