IN “What is a federation?”, I wrote that federations have some distinct and defining characteristics which make them different from other political systems, the first of which is that federal systems have at least two levels of government: a central or federal government and a regional or state government.

A federation is the sharing of powers and responsibilities between the federal and state governments. The exact distribution of powers and responsibilities varies greatly between federations, which is nonetheless enshrined in a constitution.

The Federation of Malaysia accordingly has the Federal Constitution which sets out, among others, the ways in which power is to be shared.

So read the Federal Constitution, I humbly made the call.

Read article 74. Clause (1) states that the federal parliament may make law with respect to any of the matters enumerated in the Federal List or the Concurrent List set out in the Ninth Schedule. Clause (2) states that state legislative assemblies may make law with respect to any of the matters enumerated in the State or the Concurrent List.

Finance is item 7 of the Federal List in the Ninth Schedule. It includes, among others, currency, legal tender and coinage.

Accordingly, states have no power to make law on currency, legal tender and coinage.

So, again, read the Federal Constitution. Read the federal law too.

The federal law on the management of currency of Malaysia, regulation of currency processing business and currency processing activities is now contained in the Currency Act 2020 (Act 827) which came into force on October 1, 2020.

Section 5 of the act states that Bank Negara Malaysia (BNM) shall be the sole authority to issue currency note and currency coin in Malaysia. The currency note and currency coin shall only be printed or minted by or under the authority of BNM (section 6).

Only currency note and currency coin issued by BNM shall be legal tender in Malaysia at its face value provided that the currency note is not defaced and the currency coin is not tampered with (section 10).

It is an offence for any person to issue, print or mint or authorise the issuance, printing or minting of, any note, coin, token, document or instrument, whether tangible or intangible, which is likely to pass as legal tender unless the note, coin, token, document or instrument is denominated in and fully backed by ringgit or foreign currency (section 18).

Any person who contravenes the provision commits an offence and, on conviction, shall be liable to a fine not exceeding RM50 million or imprisonment for a term not exceeding 10 years or to both. – September 4, 2023.

* Hafiz Hassan reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.