Malaysia-Indonesia Corridor

Table of Contents

  1. China’s CBDC
  2. Iran’s Paymon
  3. The Central Bank of Russia
  4. Venezuela’s Petrogold
  5. The British Royal Mint’s RGM
  6. The Gold Dinar and Mahathir’s Proposal
  7. The BRICS countries
  8. Indonesia and Kinesis


6. The Gold Dinar and Mahathir’s Proposal

The most exciting proposal for a gold-backed currency came from the prime minister of Malaysia, Mahathir bin Mohamad.

According to Mahathir, the advantage of using a cryptocurrency anchored to gold in international trade exchanges within the ASEAN area would offer, in addition to exchange rate stability, the possibility of gradually freeing Asian economies from the dependence on the US dollar.

There is therefore in Mahathir’s proposal not only an economic motivation but also a policy, namely the desire to limit the influence of the USA within the economy of Asian countries.

The proposal was made at the annual International Conference on the Future of Asia held in Tokyo on May 30, 2019. This year’s theme was “Seeking a New Global Order – Overcoming the Chaos.” 

Mahathir opened the conference with a keynote speech, mentioning the dangers of a US-dominated unipolar world and the instability of the US dollar as the world’s reserve currency.

The Malaysian Prime Minister made his comments about a gold-backed currency (in our view, a blockchain-based currency, i.e. a Stablecoin) while discussing how to improve the economic regional cooperation model within Asia, describing the European model and its common currency, the Euro, as ‘too far, too fast.’

“In the Far East, if you want to want to come together, we should start with a common trading currency, not to be used locally but for the purpose of the settling of trade. And that currency belonging to East Asia.

First, there will be fairness. At the moment we have to depend upon the US dollar, but the US dollar is also not stable. So the currency that we propose should be based on gold because gold is much more stable.“

In his Mahathir’s Gold-backed Currency – Loose Talk or pan-Asian Plan?, R. Manly writes that what the Malaysian prime minister is proposing is a regional reserve currency, replacing the US dollar and linked to gold, which the national currencies of the member states could be converted into. Bilateral trade would then be settled via gold by netting trade obligations in this gold-backed regional currency.

With this proposal, Mahathir was pursuing an idea that he has long cultivated, that is since Malaysia had been hit by the Asian financial crisis of 1997-1998, a period in which the ringgit entered a crisis such as to have to be tied to the US dollar.

In October 2002, during a conference in Malaysia’s capital Kuala Lumpur about “The Gold Dinar in Multilateral Trade,” Mahathir proposed to use the gold dinar as the centre of a gold-backed international trading system.

On that occasion, Mahathir explained: “The Gold dinar can provide the currency for trade between nations. If we value all trade items against gold, then we will have no problem with the exchange rate… It is a currency for everyday transactions in the domestic market… We need national currencies through bilateral payments arrangements.”


7. The BRICS countries

The BRICS countries (Brasil, Russia, India, China, South-Africa) is a loose political and economic association of countries, which, as of 2018 had a combined nominal gross domestic product of about 23.2% of the gross world product.

There are talks among the BRICS countries about the introduction of a common cryptocurrency, to be deployed as a common means for settling international payments among BRICS nations.

The BRICS Business Council discussed creating such a common currency during the 11th BRICS summit that was held in Brazil on Nov. 13–14.

Kirill Dmitriev is the director-general of the Russian Direct Investment Fund, director-general of the Russian Direct Investment Fund, Russia’s sovereign wealth fund established in June 2011 by the Russian government in order to make equity investments in the most promising sectors of the Russian economy.

According to Dmitriev, an efficient BRICS payment system could be used to stimulate settlements between the countries while reducing the use of the U.S. dollar for these purposes.

There is also a political aspect to consider, namely the fact that a system based on such a currency could become an alternative to the US-controlled SWIFT system, facilitating commercial and financial trade with countries under U.S. sanctions, reducing the risk of payments being frozen by Washington.

Dmitriev also noted that in recent years, the share of U.S. dollars payments made between the BRICS countries has significantly decreased. In Russia, for example, over the past five years, the share of USD in foreign trade transactions fell from 92% to 50%, while those made in the Russian ruble rose from 3% to 14%. 

Further advantages of using a single cryptocurrency would consist on one hand in a decrease of the costs of the financial transaction, and on the other hand, in reducing the currency risks bound to the use of the US dollar as currency intermediary.

There is also discussion about whether this BRICS currency should be tied to currencies or commodities.

According to Elina Sidorenko, the head of the Russian State Duma’s working group on cryptocurrency issues, there are several options on the table, one of them being pegging it to the price of gold.

This option would seem supported by the Basel III Accords, where gold is considered as a Tier I asset.

Olinga Taeed, a council member and expert advisor at the China E-Commerce Blockchain Committee, said that the Chinese authorities have been researching the possibility of issuing a gold-backed token due to the country’s access to natural mineral reserves in Africa through China’s Belt and Road Initiative.


8. Indonesia and Kinesis

To end this review of gold-backed blockchain-based currencies supported by the public authorities, we must mention Indonesia.

According to the last News from Kinesis, in Indonesia, the Kinesis monetary system is going to be implemented with the support and participation of various government agencies, including PT POS (government post office), JFX (Jakarta Futures Exchange) and KBI (government clearinghouse).

The Kinesis Monetary System will be implemented in two areas: Cross Border Value (the functional equivalent of International remittances) and Gold Savings / Payments Programs.

Cross Border Value (CBV)

According to Kinesis, around 6 million Indonesians are working as migrant workers across several nations, especially Malaysia, Saudi Arabia, and the United Arab Emirates.

Through the Indonesian Postal Service, Kinesis currencies will be deployed within the so-called Malaysia-Indonesia Corridor, which includes around 3 million migrant workers (both formal and informal, i.e. with and without working papers). 

Through the Malaysia-Indonesia Corridor, almost US $ 1 billion are flowing each month from Malaysia to Indonesia.

The Kinesis Monetary System will allow the purchase of KAU’s (gold) in the host country, send them via the Kinesis Blockchain Network (KBN), and sell them in the receiving country.

After consulting with the Indonesian authorities, Kinesis will be able to circumvent Remittance / International Payments licensing requirements as the KAU’s transferred will be considered a commodity.




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