The current decade has seen a surge of bids to reduce reliance on the U.S. dollar and break its global dominance. The Association of Southeast Asian Nations (ASEAN) is the latest to join this movement, with the members agreeing to encourage the use of local currencies for economic and financial transactions during the 42nd Summit. The 10 ASEAN members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. This was preceded by the finance ministers and central bank governors of the various ASEAN countries meeting in Bali last March, and agreeing to take measures to boost the utilization of local currencies and reduce the reliance on the U.S. dollar or other major world currencies for cross-border trade and investment.
The U.S. dollar has been considered a status quo currency since the second half of the 20th century, when it became the most utilized reserve currency for global trade. This has seen the U.S. receive a large benefit from its trade deficit, as other countries have to exchange their money for USD to access the global market. However, several multinational bodies are now acting on the idea of de-dollarization, which is the notion of replacing the U.S. dollar with a new reserve currency or a basket of currencies.
The BRICS countries, which include Brazil, Russia, India, China, and South Africa, are working on the concept of a common currency aimed at reducing their dollar dependence and moving away from the U.S. hegemony. The new common currency could decrease the U.S. dollar’s reserve currency status, which would result in a reduced level of power and sway for the U.S. government and decreased U.S. living standards.
The ASEAN's recent move comes to challenge the U.S. dollar’s dominance and see the rise of local currencies in the region. In the same regard, Venezuela, Iran, and Russia have taken steps to break free from US sanctions and reduce dollar dependence, such as instituting blockchain solutions or the gold-backed petro. The common mission of these initiatives is to reduce reliance on the U.S. dollar and break from its hegemony, most likely culminating in increased financial versatility and economic development for these countries.
Heidi Martin
- 2023-05-14
ASEAN breaking from US Dollar Dependence
ASEAN has taken steps to reduce reliance on the US dollar and break its global hegemony, while other countries have also taken steps to reduce US dollar dependence such as instituting blockchain solutions and the gold-backed petro.
