1,5 min read –
Asia Ditching the Dollar –
Regional Swap Network Rising –
Is the USD Empire Finally Crumbling?
Asia’s emerging “swap system” includes:
➡️ a network of bilateral currency swap agreements
➡️ the multilateral Chiang Mai Initiative Multilateralization (CMIM)
➡️ and ASEAN’s Local Currency Transaction (LCT) framework.
These tools enable countries to settle trade and investments directly in regional currencies, reducing or eliminating reliance on the US dollar.
What is it?
Central banks provide liquidity through swaps, allowing businesses to invoice, pay, and receive in local currencies via linked systems (for ex QR codes, China’s CIPS or Cross-Border Interbank Payment System).
CMIM currently pools $240 billion among ASEAN + China, Japan, and South Korea, adding rapid financing in regional currencies.
Why and when?
The roots trace to the 1997 Asian Financial Crisis, when dollar dependence exposed vulnerabilities to IMF conditions and US influence.
Post-2008 global crisis and recent geopolitical tensions accelerated efforts.
ASEAN formalized Local Currency Transaction promotion at the 2023 summit, embedding it in the 2026-2030 Economic Plan to counter dollar volatility, sanctions risks, and trade disruptions.
How?
Bilateral frameworks cover trade, investment, and broader transactions.
Traders use direct settlement mechanisms, bypassing dollar conversion and reserves.
Pros: Lower transaction costs and Forex risks, smoother intra-Asian trade, greater monetary sovereignty, and resilience against US policy shifts or sanctions.
Cons: Limited liquidity compared to dollar markets, risk of angering the USA.
Consequences
This swap system accelerates de-dollarization, deepens regional integration, and fosters a multipolar system.
ASEAN’s push for full payment connectivity signals a transformative shift in global trade dynamics.
For Indonesia
As ASEAN’s largest economy, Indonesia actively leads this shift.
Bank Indonesia has expanded Local Currency Transactions with neighboring countries, totaling billions in non-dollar trade.
This reduces exposure to rupiah volatility, supports export competitiveness, and strengthens financial autonomy amid global uncertainties.
Conclusion
Is the American dollar empire coming to an end? Tell us what you think at bonjour@cintasia.com.
In any case, we are seeing the emergence of a new multipolar world, which geographical and financial center is Hong-Kong.
See our previous article about the Valeriepieris circle here.
https://cintasia.com/what-is-the-valeriepieris-circle/
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Picture: Bank Indonesia