An official meeting of all ASEAN Finance Ministers and Central Bank Governors kicked off on Tuesday in Indonesia. Top of the agenda are discussions to reduce dependence on the US Dollar, Euro, Yen, and British Pound from financial transactions and move to settlements in local currencies, ASEAN Briefing reported.

As per the report, the meeting discussed efforts to reduce dependence on major currencies through the Local Currency Transaction (LCT) scheme. This is an extension of the previous Local Currency Settlement (LCS) scheme that has already begun to be implemented between ASEAN members.

News magazine Tempo specified that a digital cross-border payments system, allowing ASEAN member states to use local currencies in trade, would be expanded further. An agreement on such cooperation was reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand in November 2022.

This comes after Indonesia’s banking regulator stated on March 27 that the Bank of Indonesia is preparing to introduce its own domestic payment system.

Indonesian President Joko Widodo has urged regional administrations to start using credit cards issued by local banks and gradually stop using foreign payment systems.

He argued that Indonesia needed to shield itself from geopolitical disruptions, citing the sanctions targeting Russia’s financial sector from the US, EU, and their allies over the conflict in Ukraine.

Moving away from Western payment systems is necessary to protect transactions from “possible geopolitical repercussions,” Widodo was quoted as saying by Tempo.

Notably, of the ASEAN nations, only Singapore has enforced sanctions on Russia, while all other ASEAN nations continue to trade with the country.

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