In a recent meeting in Indonesia, ASEAN Finance Ministers and Central Bank Governors discussed how to slash down the dependence on major currencies. According to a briefing report, the said union of nations considers dropping the U.S. dollar, euro, yen, and British pound from financial transactions. Instead, they collectively intend to foster settlements via local currencies.
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Moving away from western payment systems is “necessary”: Indonesian President
If such a measure is adopted, ASEAN cross-border digital payment system would be expanded further. Alongside, it will allow member states to use local currencies for trade. Notably, an agreement on the same was reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand in November 2022. It is worth noting that Indonesia’s banking regulator said on March 27 that the Bank of Indonesia is preparing to phase out Visa and Mastercard. Parallelly, it would introduce its own domestic payment system.
Indonesian President Joko Widodo has asked regional administrations to start using credit cards issued by local banks. Doing so would gradually stop using foreign payment systems. Widodo said,
Moving away from Western payment systems is necessary to protect transactions from “possible geopolitical repercussions.”
Leaving aside ASEAN nations, other countries have also been steering away from the U.S. dollar of late. Recently, Russian President Vladimir Putin alleged that around two-thirds of the trade between Russia and China happens with the yuan and ruble. Like Watcher Guru reported, he indicated that his country is in favor of using the yuan in settlements between Russia and the countries of Asia, Africa, and Latin America instead of the U.S dollar.
Now, a decision by ASEAN to steer away from major currencies like the dollar and yen will put back pressure on western countries.
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