- KUALA LUMPUR -- The US dollar
is facing an imminent collapse and the global economy will suffer a "catastrophe"
when it is rejected as the currency for trade, former Malaysian prime minister
Mahathir Mohamad said in remarks published yesterday.
- Mahathir, who famously ignored International Monetary
Fund (IMF) advice and instead chose to peg his country's ringgit to the
US dollar during the Asian financial crisis, said a standard gold currency
was now the best alternative for world trade. The dollar was retaining
some value because of fears of a global economic catastrophe if it was
rejected, he told a conference of some 650 chief executives from 30 countries
at a conference in Kota Kinabalu on Borneo island on Tuesday, The Star
- "But the catastrophe will come one day because even
the most powerful country in the world cannot repay loans amounting to
US$7 trillion," Mahathir said.
- The former premier said he believed central banks worldwide
were reducing their US dollar reserves and he suspected that Malaysia was
also switching to other currencies.
- Telling reporters that he was giving his personal views,
he warned that "unless [the Americans] change their president and
have a more responsible president who will try to reduce the deficit, they
will have serious trouble with the US currency."
- Mahathir told the CEOs it was doubtful that the sliding
dollar could regain its old strength as the administration of US President
George W. Bush did not consider deficits worth reducing.
- The huge deficit meant that the dollar had no backing
but it continued to be used internationally because some people still accepted
payments in dollars.
- "But there will come a time when we will switch
away from the dollar and we have suggested the use of gold for international
trade," he said.
- Meanwhile, if companies did not want to be "short-changed"
they should insist on payments in alternative currencies such as the euro
or be paid in US dollars but at euro-equivalent value, he said.
- Mahathir, who was widely condemned internationally for
imposing capital controls and pegging the ringgit to the dollar during
the Asian financial collapse 1998, has since won plaudits for his handling
of the crisis. He created a stir in January when he joined a chorus of
calls for Malaysia to review the currency peg of 3.8 to the dollar given
the US unit's decline in value.