ASEAN nations meet, discuss dumping US Dollar, Euro for trade

Finance ministers and central bank governors from the Association of Southeast Asian Nations (ASEAN) this week discussed dropping the US Dollar, Euro, Yen, and British Pound from financial transactions and instead moving to settlements in local currencies.

ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. According to IMF figures, the combined nominal GDP of the bloc in 2023 amounts to approximately $3.9 trillion.

The meeting, hosted by Indonesia, focused mainly on discussing ways to reduce dependence on western currencies through the Local Currency Transaction (LCT) system, an extension of a previous settlement system that has started to be implemented among ASEAN member states and which allows trade to be conducted in local currencies.

An agreement on a similar system was reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand last November.

Indonesian President Joko Widodo has also urged his ASEAN partners to drop western payment systems like Visa and Mastercard and start using locally-developed systems, arguing that the region needs to shield itself from “possible geopolitical repercussions.”

“Be very careful. We must remember the sanctions imposed by the US on Russia. Visa and Mastercard could be a problem,” Widodo said during a local business gathering earlier this month.

Last March, Russian tourists found themselves stranded in Bali with no way to pay for meals or accommodation or even get a flight home due to western sanctions that locked out Russian banks from the SWIFT international payment system.

Out of the 10 ASEAN member states, only Singapore has enforced western sanctions on Russia.

Over the past year, a growing number of nations across the world have moved away from conducting trade in US dollars as a result of Washington’s policy of economic warfare.

Just this week, Brazil, the largest economy in Latin America, reached an agreement with China to enable import and export transactions between both nations to take place without using the US dollar.

Several nations in West Asia and North Africa have also started to move away from the greenback hegemony in recent months, like Iraq, the UAE, Egypt, and Saudi Arabia.