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Defying the dollar: ASEAN pushes for greater local currency use
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Banknotes of the Chinese yuan and US dollar are pictured on Sept. 29, 2022. (Reuters/Florence Lo)
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SEAN leaders declared at this week’s summit in Labuan Bajo, East Nusa Tenggara, that member countries should use their own currencies more often in intraregional trade, as the bloc aims to insulate the region from external volatility.
ASEAN is seeking to improve its regional payment connectivity through initiatives such as the recently launched Indonesia-Malaysia quick response (QR) standard, which allows citizens of both countries to use QR codes and their local currencies to make payments in the other. The bloc is also encouraging the settlement of regional accounts in local currencies rather than with the US dollar, the go-to currency for international trade.
“This is in line with the purpose of ASEAN centrality, so that ASEAN can be much stronger and self-reliant,” President Joko “Jokowi” Widodo said of the currency policy recommendation in remarks on Thursday.
Among ASEAN countries, Indonesia, Thailand, Malaysia and the Philippines been developing their capacity for local currency settlement since 2017. Recently, the region has established the similar framework with China, Japan and South Korea.
ASEAN leaders have also agreed to explore the development of a unified ASEAN local currency transaction framework that would help countries in the region transition away from established trade currencies like the US dollar.
Read also: QRIS expands to Malaysia in push for cross-border payments
A number of countries have become wary of their reliance on the US dollar amid global inflation, volatility and a series of recent bank failures in the country.
