World Financial System Overly Dependent on US – PM

KUALA LUMPUR: Countries in the Global South inherit a world financial system that is overly dependent on the United States (US) dollar, thus benefiting multinational corporations more than small enterprises.

Prime Minister Datuk Seri Anwar Ibrahim said the system has also caused many countries to suffer spillover effects when economic or financial crises occur in other countries, even though they were not directly involved.

According to him, Malaysia has nevertheless taken steps to reduce this dependency through the use of local currencies in trade with several countries, including China.

“We inherited a system that is overly dependent on the dollar and generally benefits large multinational corporations compared to small business owners. We are not talking about full de-dollarisation because the dollar is still important in financial transactions, but we have expanded the use of local currencies, namely the yuan and the ringgit, in many trade transactions,” he said.

He said this in a speech at the launch of Ant International’s Global Development Centre (GDC) at The Exchange 106, Tun Razak Exchange (TRX), today.

Anwar said the use of local currencies in Malaysia-China trade had increased from about five per cent to 18 per cent of the total trade between the two countries, thanks to mutual confidence and commitment.

He added that the interconnected nature of the global economy also means that a crisis in one country can spread rapidly worldwide, as was the case during the 2008 Global Financial Crisis.

“Malaysia had no connection to the cause of that crisis, but we still had to bear its effects. That is why we need innovation that can enhance economic resilience, reduce exposure to international shocks and expand access to financing,” he said.

He added that advances in financial technology and artificial intelligence (AI) must be harnessed to build a fairer, more inclusive financial system that benefits the people, rather than only benefiting certain parties.

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