europe.chinadaily.com.cn
ASEAN's De-Dollarization: A Shift to Local Currencies and the Yuan
Driven by geopolitical uncertainties and currency volatility, ASEAN nations are increasingly using local currencies and the Chinese yuan for cross-border payments, reducing reliance on the US dollar and facilitated by initiatives like regional cross-border payment systems and currency swap agreements.
- What are the primary drivers behind ASEAN's decreasing reliance on the US dollar for cross-border transactions?
- ASEAN nations are actively reducing their reliance on the US dollar for cross-border transactions, shifting toward local currencies and the Chinese yuan. This is driven by factors such as geopolitical uncertainties, currency volatility, and the desire to reduce transaction costs. Individuals like Malaysian investor Ian Yoong are already using e-wallets and QR codes for seamless payments in local currencies.
- How are initiatives like regional payment systems and currency swap agreements facilitating the shift away from the US dollar?
- The move away from the US dollar in Southeast Asia is evidenced by a rise in intra-ASEAN trade settled in local currencies exceeding 25 percent in 2024, up from less than 10 percent in 2019. This shift is supported by initiatives like regional cross-border payment systems and bilateral currency swap agreements between China and several ASEAN central banks. The increasing use of the Chinese yuan is further fueled by China's growing economic presence in the region.
- What are the potential long-term economic and geopolitical implications of ASEAN's de-dollarization efforts, and what challenges need to be addressed?
- The long-term implications include increased regional economic integration within ASEAN and a potentially reduced dominance of the US dollar in global trade. However, challenges remain, such as ensuring the stability and liquidity of alternative currencies to maintain market confidence. The full internationalization of the yuan is a gradual process, requiring ongoing development and adoption.
Cognitive Concepts
Framing Bias
The article's framing heavily emphasizes the benefits of de-dollarization and the increasing role of the yuan and local currencies. The positive quotes from various experts and the focus on the ASEAN leaders' commitment to promoting local currency settlements create a narrative that strongly supports this trend. While the article mentions the US dollar's continued dominance, the overall framing leans towards presenting de-dollarization as inevitable and beneficial. The inclusion of examples like Mr. Yoong's personal experience reinforces this positive portrayal.
Language Bias
The article generally maintains a neutral tone, but certain word choices subtly favor the narrative of de-dollarization. Phrases like "inevitable," "accelerating move away," and "rapid shift" suggest a pre-determined outcome. More neutral alternatives could be used to present the shift as a gradual process with potential uncertainties.
Bias by Omission
The article focuses heavily on the benefits of de-dollarization and the rise of local currencies and the yuan, but it omits potential drawbacks or challenges. For instance, it doesn't discuss the potential risks associated with relying more heavily on the yuan, such as concerns about China's capital controls or the potential for political influence. It also doesn't fully explore the challenges in achieving widespread adoption of local currency settlements across the diverse ASEAN economies. While acknowledging the US dollar's dominance, the article could benefit from a more balanced perspective acknowledging its continued importance and the potential limitations of a rapid shift away from it.
False Dichotomy
The article presents a somewhat simplified view of the shift away from the US dollar, framing it as a straightforward move towards local currencies and the yuan. It doesn't fully explore the complexities of the situation, such as the potential for multiple currencies to coexist in international trade, or the possibility of a gradual, rather than abrupt, transition. The narrative might benefit from acknowledging the potential for a multi-polar currency system rather than presenting a binary choice between the US dollar and alternatives.
Sustainable Development Goals
The shift towards local currency settlements in ASEAN reduces transaction costs, benefiting smaller businesses and promoting financial inclusion. This aligns with SDG 10, which aims to reduce inequality within and among countries by ensuring equal opportunities and access to financial resources.