Simon Ng The finance people in a group called the Association of Southeast Asian Nations (ASEAN) are looking into ways to make their countries less dependent on the U.S. dollar and to encourage people to use their own currency when they’re buying and selling stuff. Indonesian President Joko Widodo said we should consider what happened when the US punished Russia with sanctions.
ASEAN Finance Ministers Agree on Local Currency Transaction (LCT) System for Easier Trade & Investment
Recently on March 30 and 31, the finance ministers and central bank governors of ten Asian countries known as ASEAN gathered for a meeting in Indonesia. They talked about how to reduce their reliance on American dollars and other western currencies. The countries included in ASEAN are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Six different international organizations participated in the meeting. These are Asian Development Bank (ADB), ASEAN+3 Macroeconomic Research Office (AMRO), International Monetary Fund (IMF), Financial Supervisory Board (FSB), Bank for International Settlement (BIS) and World Bank.
At the end of their two-day meeting, the ASEAN finance ministers and central bank governors agreed to use local currencies to make it easier for people in the ASEAN region to trade and invest with each other.
The finance chiefs of ASEAN (Association of Southeast Asian Nations) came up with a plan called Local Currency Transaction (LCT) System in order to move away from relying on U.S. dollar. This system is similar to the settlement system they have between each other and it allows them to use their own, local currencies instead.
Indonesia Seeks to Protect its Economy with Local Payment Systems
Indonesian President Joko Widodo recently asked his country’s local government to switch from using foreign payment systems such as credit cards to ones provided by Indonesian banks. This is needed to protect Indonesia from any problems that could happen in other places, like the economic sanctions against Russia due to the problems in Ukraine.
We should stop using payment systems from the West since they might be affected by political issues. As an example, Widodo said that we should remember the sanctions which the US has put on Russia.
The Indonesian president said that because of the sanctions placed on Russia, it highlighted how fragile and vulnerable countries are if their money comes from other nations. He thinks Indonesia should plan for this possibility too and suggested using their own payments systems to protect its economy from outside harm while also helping out local banks and businesses by utilizing them.
Do you have any thoughts about ASEAN countries wanting to use something other than the U.S. dollar? Let us know in the comment section!
