ASEAN To Stop Using Dollar, Yen, Pound, And Euro-2024 But Why? Here Is All You Need To Know.

ASEAN

ASEAN or the Association of Southeast Asian Nations has considered an initiative to dump the currencies it currently uses in Dollar, Yen, Pound, and Euro.

According to a briefing report released by ASEAN finance ministers and Central Bank Governors, the positives of doing this would be in the expansion of the current cross-border payment system. This would also allow the member states of ASEAN to use their local currencies for trade.

An agreement on this kind of cooperation was first reached in November 2022 between Indonesia, Malaysia, Singapore, the Philippines, and Thailand.

Recently on 27th March, the Indonesian central bank announced that it will be dialing down the use of Visa and MasterCard payments. The administration will do this while also introducing and integrating its own domestic payment system in the Southeast Asian country.

The Indonesian president Joko Widodo had earlier asked regional administrators to move away from Western payment systems and start the use of credit cards issued by national banks. He said that dumping Western payments systems is vital and necessary to protect transactions from certain “possible geopolitical repercussions”. He also argued that Indonesia needed to shield itself from further geopolitical disruptions like the sanctions against Russia’s financial sector by the Global North have done.

ASEAN meeting

The ASEAN meeting also discussed efforts to reduce dependency on major currencies through their Local Currency Transaction scheme. The scheme is an extension of the previous Local Currency Settlement scheme that has already seen implementation in some ASEAN member states. ASEAN was founded in 1967 and is a political and economic intergovernmental organization with 10 member states; Brunei, Thailand, Philippines, Cambodia, Laos, Myanmar, Malaysia, Singapore, Vietnam, and Indonesia.

An initiative like the proposed currency dump will further strengthen the regional co-dependency and cooperation between ASEAN member states. This allows them to practice non-alignment from the West and focus on the specific interests of the global South.

Other countries have also been attempting to move away from the US dollar specifically. Russia’s Vladimir Putin alleged that more than 2/3rd of the Russo-Chinese trade happens with Yuan and Ruble. As further proof of that, the Chinese Yuan replaced the US dollar as the most traded currency in Russia, almost a year after the Russo-Ukraine war first began. In fact, Yuan-Ruble trading surged almost 1000% since the war in Ukraine has broken out.

have a look at this video: The Dollar Is In Trouble! 7 Signs That Global De-Dollarization Has Just Shifted Into Overdrive

The larger geopolitical repercussions of this dumping of Western currencies by ASEAN are speculative, but some estimated impacts can be the widening of the drift between the global south and the global north. This is seen as a desired status by the global south and not so much by the north.

The move would also put pressure on Western countries to retaliate in their own way, likely through means of limiting the relevancy of global South currencies in the North. The long-term effects of this move are yet to be seen.