Asia Must Initiate Changes To Monetary, Financial Systems

http://www.bernama.com.my/bernama/v3/news.php?id=374756

Asia Must Initiate Changes To Monetary, Financial Systems

By Mohamad Nasir Yusoff, Bernama.com, November 27, 2008

NUSA DUA (Bali), Nov 27 (Bernama) -- It is important for Asian countries to initiate changes to the monetary and financial systems to reduce the impact of the current financial crisis of America and Europe, and perhaps enable earlier recovery, former Malaysian prime minister Tun Dr Mahathir Mohamad said Thursday.

He said that after witnessing all the systems of the West, which seemed to be crumbling now, the world was about to view Asian practices and systems more positively.

"Asian countries must therefore make their voices heard, including those of the small developing economies. It would be fatal for them if they allow, as in the past, the rich and the powerful to devise the systems by which they must all function.

"In particular, the banking system and practices need to be looked at from the Asian developing economies' point of view and interest," he said when delivering a keynote address at Indonesia's National Committee On Governance's 2nd Annual Top Executive Forum on Governance here.

Dr Mahathir said that in a Eurocentric world, Asians tend to accept everything that came from the West as right and proper and it was difficult for Asians to reject what originated from the Europeans.

"But that culture, that blind acceptance of the systems and ways of the Europeans must be modified, if not discarded. What we're seeing today is the collapse of a very fundamental European institution, that of money and banking," he added.

Dr Mahathir said it was not enough for Asian countries to just tweak their present system of governance as they must be prepared for radical change and Asian ideas must find a place in the development of those changes.

Asian countries, he stressed, must go back to the drawing board, question the system that have been used for centuries, consider redefining them, introduce new rules and regulations and provide for better governance.

"We may have to throw out the system altogether and devise a new one," he said, adding that all those were not in Asian culture.

"But our culture must not stand in the way of necessary reforms, if it means saving our economies and our states," he told the participants of the two-day forum.

Earlier, in his speech on "Governance Reform in Asia: Cultural Perspectives", Dr Mahathir told some 100 top executives of companies operating in Indonesia that Asians were culturally conservative and orthodox and also had an inferiority complex, believing that Europeans were superior people.

So, when Europeans came with ideas about globalisation, borderless world and free trade, the general tendency was to accept those ideas and reforms of governance must be made to accommodate the new vision of the world as a global village, to make possible the free flow of capital and the sanctity of unregulated markets, he said.

"But even as these things were being initiated, the world came to realise that the American financial crisis was not going to be confined to America alone but would engulf the whole world. Not only are they not delivering the expected benefits that they seem to have done to the world's economy in the past but they seem about to destroy it," he said.

Believing that Asian countries would not want to be dragged down by an economic and financial crisis not of their own making, he asked whether they should be carrying out reforms of governance to facilitate globalisation and free trade as they had been urged to do.

On the US dollar, Dr Mahathir said that without gold it had no backing at all and was basically a useless piece of paper and that only the demand for the US dollar to settle trade payments kept its value up.

"It is doubtful if the US knows how much US dollar is in circulation in the world. Its very poor security feature also makes it easy to forge," he said, adding that the US owed the world an estimated US$14 trillion dollars, an amount which it could never hope to pay, what more when every day the US government had to borrow US$1.5 billion to finance its administration.

Responding to a question later, Dr Mahathir reiterated his call made years ago that trade payments among countries be made in gold dinar and pointed out that the Bretton Woods agreement too provided for gold to back currencies as gold has real value.

-- BERNAMA