Finance ministers and central bank governors of the Association of Southeast Asian Nations (ASEAN) are exploring ways to lessen their countries’ reliance on the US dollar and promote the use of local currencies in trade deals. “We must remember the sanctions imposed by the United States on Russia,” Indonesian President Joko Widodo said.
ASEAN countries seek to reduce dependence on the US dollar
Finance ministers and central bank governors of the Association of Southeast Asian Nations (ASEAN) met on March 30-31 in Bali, Indonesia. One of the topics they discussed was reducing reliance on Western currencies, such as the US dollar. ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
The meeting was also attended by representatives of six international organizations
organizations, namely the Asian Development Bank (ADB), the ASEAN+3 Macroeconomic Research Office (AMRO), the International Monetary Fund (IMF), the Financial Supervisory Board (FSB), the Bank for International Settlements ( BIS) and the World Bank.
At the end of the two-day meeting, ASEAN finance ministers and central bank governors issued a joint statement saying they agreed to “strengthen financial resilience, inter alia, through the use of local currency to support cross-border trade and investment. in the ASEAN region.
One strategy ASEAN finance chiefs discussed to move away from reliance on the US dollar was the adoption of its local currency transaction (LCT) system. This system is an extension of a previous settlement system among ASEAN member states that allows settlements in local currencies.
Indonesian President Warns of “Geopolitical Repercussions” of Relying on Western Payment Systems
Indonesian President Joko Widodo recently urged regional administrations to start using credit cards issued by local banks and gradually stop using foreign payment systems. He explained that this change is necessary to protect Indonesia from geopolitical disturbances, citing the example of sanctions imposed on Russia’s financial sector due to the conflict in Ukraine.
A move away from Western payment systems is necessary to protect financial transactions from “possible geopolitical repercussions,” Widodo described, adding:
Be very careful. We must remember the sanctions imposed by the US on Russia.
The Indonesian president warned that the sanctions imposed on Russia had exposed the vulnerability of countries that rely on foreign payment systems. He stressed the need for Indonesia to prepare for the possibility of facing similar sanctions in the future. The President stated that the use of local payment systems would help protect Indonesia’s economy from external shocks while supporting the national economy by promoting local banks and businesses.
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