ASEAN Nations Take Action to Diminish Rely on US Dollar for Trade Settlements – Economics Bitcoin News


The finance ministers and central bank governors of the Association of Southeast Asian Nations (ASEAN) are exploring methods to reduce their nations’ reliance on the U.S. dollar and to promote the use of local currencies in trade settlements. “We must take into account the sanctions imposed by the US on Russia,” said Indonesian President Joko Widodo.

ASEAN Nations Aim to Cut Dependence on USD

The finance ministers and central bank governors of the Association of Southeast Asian Nations (ASEAN) attended a meeting on March 30-31 in Bali, Indonesia. One of the topics they discussed was reducing reliance on western currencies, such as the U.S. dollar. ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

The meeting was also attended by representatives from six international
organizations, including Asian Development Bank (ADB), ASEAN+3 Macroeconomic Research Office (AMRO), the International Monetary Fund (IMF), the Financial Supervisory Board (FSB), the Bank for International Settlement (BIS), and the World Bank.

At the conclusion of the two-day meeting, the ASEAN finance ministers and central bank governors issued a joint statement, stating that they concurred to “reinforce financial resilience, among others, through the use of local currency to support cross-border trade and investment in the ASEAN region.”

One strategy the ASEAN finance authorities discussed in order to move away from U.S. dollar reliance was the adoption of their Local Currency Transaction (LCT) system. This system is an extension of a previous settlement system among ASEAN member states that allows for settlements in local currencies.

Indonesian President Warns of ‘Geopolitical Outcomes’ of Relying on Western Payment Systems

Indonesian President Joko Widodo recently urged regional administrations to start using credit cards issued by local banks and to gradually stop using foreign payment systems. He explained that this change is needed to protect Indonesia from geopolitical disruptions, citing the example of sanctions imposed on Russia’s financial sector due to the conflict in Ukraine.

Stepping away from western payment systems is necessary to protect financial transactions from “possible geopolitical outcomes,” Widodo described, adding:

Be very cautious. We must take into account the sanctions imposed by the U.S. 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 highlighted the need for Indonesia to prepare for the possibility of facing similar sanctions in the future. The president stated that using local payment systems would help safeguard Indonesia’s economy from external shocks while also supporting the domestic economy by promoting local banks and businesses.

What do you think about ASEAN nations seeking to reduce reliance on the U.S. dollar? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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