2023-05-14 09:33:07
Leaders of the Association of Southeast Asian Nations (ASEAN) agreed to “encourage the use of local currencies in economic and financial transactions.” The group includes Brunei, Cambodia, Indonesia, Laos, Cambodia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. This move might help them reduce their dependence on the US dollar.
Southeast Asian countries want to break the dominance of the dollar
Leaders of the Association of Southeast Asian Nations (ASEAN) gathered in Labuan Bajo, Indonesia for the 42nd ASEAN Summit on May 10-11 under the chairmanship of the Republic of Indonesia. The summit was chaired by Joko Widodo, President of Indonesia.
Issued by the President at the end of the Summit official statement according to: “We adopted the ASEAN Leaders’ Declaration on Promoting Regional Payments Connectivity and Promoting Local Currency Transactions to Promote Bilateral and Multilateral Payments Connectivity Agreements. With this, we want to strengthen economic integration, enabling fast, seamless and more affordable cross-border payments throughout the region.”
The statement continues:
“In order to deepen regional financial integration and promote the development of the local currency market, we are committed to encouraging the use of local currencies in economic and financial transactions among ASEAN member states in order to strengthen the financial stability of the region.”
The background to this is that at the end of March, ASEAN finance ministers and central bank governors met in Bali, Indonesia, and agreed to take steps to strengthen the use of local currencies in the region and reduce cross-border trade and investment from the US dollar or other major international dependence on currencies.
Bank of Indonesia President Perry Warjiyo said in April that Indonesia would follow the BRICS countries’ example of de-dollarization. The BRICS countries (Brazil, Russia, India, China and South Africa) are working to create a common currency to reduce their dependence on the US dollar. Leaders of the BRICS countries plan to discuss this topic at their upcoming summit.
Many expect that the common currency of the BRICS countries might undermine the dominance of the US dollar. A former White House economist also warned that if the BRICS countries used only the common currency in international trade, “would remove an obstacle that is now thwarting their efforts to exit dollar hegemony”. Investment analyst Jon Wolfenbarger has warned that a successful BRICS currency might result in the US dollar losing its status as a reserve currency. This might also cause serious damage to the American economy and lead to a decrease in the power of the American government.
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