Malaysia no longer believes it’s necessary to depend on the U.S. dollar, Prime Minister Anwar Ibrahim said during an address to the nation’s Parliament.
Following last week’s state visit to China, Mr. Anwar revealed that the regime in Beijing is open to deliberations with Kuala Lumpur to establish an “Asian Monetary Fund.”
The concept of an Asian monetary fund was first proposed in 1997 by the Japanese government during the regional financial crisis. Asian countries would fund the organization and ensure ample liquidity levels to weather economic storms. However, U.S. and Chinese opposition kept the group from being formed.
Now that several economies have strengthened considerably since then, such as China and Japan, Mr. Anwar said he thinks that now is the time to reopen the discussion.
The prime minister, who also serves as finance minister, also confirmed that the two countries negotiated bilateral trade in yuan and ringgit after the Chinese regime invested $39 billion in the Malaysian economy.
Many Asian countries, particularly net food importers, have been negatively affected by the dollar’s strength over the past eight years.
China Grows Yuan’s Influence
In the summer of 2022, China created a yuan-pooling program with the Bank for International Settlements, an institution for central banks. The Renminbi Liquidity Arrangement would provide liquidity to countries in the Asia–Pacific region during economic turmoil and market volatility.
The program includes the People’s Bank of China (PBoC), the Central Bank of Chile, the Hong Kong Monetary Authority, the Bank of Indonesia, and the Central Bank of Malaysia.
Experts note that this is part of the Chinese regime’s broader objective to internationalize the yuan. In recent years, China has signed dozens of bilateral currency-swap agreements, including with Western central banks, such as the Bank of England and the European Central Bank.
Although the de-dollarization campaign has generated significant momentum over the past 12 months, critics have asserted that global financial markets will take a long time to accept and trust the yuan.
But the growing prominence of the yuan and the broader de-dollarization campaign could be bad news for the international community, according to U.S. Sen. Marco Rubio (R-Fla.).
Mr. Rubio warned that U.S. sanctions would become worthless over the next five years as more countries aligning with China will use currencies other than the dollar.
Brazil and China signed an agreement on March 29 to settle trade and financial transactions in yuan and reals, effectively abandoning the U.S. dollar.
“They are creating a secondary economy in the world totally independent of the United States,” Mr. Rubio said. “We won’t have to talk about sanctions in five years because there will be so many countries transacting in currencies other than the dollar that we won’t have the ability to sanction them.”
