Perry Warjiyo, the Governor of Bank Indonesia, has stated that ASEAN member countries are beginning to shift away from using the US dollar in cross-border transactions. This revelation came during a meeting of finance ministers and central bank governors of ASEAN, known as AFMGM.

The adoption of local currencies in cross-border transactions aims to bolster the strength of the respective countries' currencies. Moreover, Indonesia, Malaysia, and Thailand have already taken this step with their respective central banks.

The employment of the Local Currency Settlement or LCS system can reduce transaction costs. By utilizing the value of these currencies, cross-border transactions can be conducted directly without the need for conversion to USD first. For instance, Thai tourists traveling to Indonesia can directly exchange their Baht for Rupiah, and vice versa.

According to Perry, ASEAN leaders have already endorsed and committed to expanding the agreed-upon transactions by these Finance Ministers, particularly in three key areas: trade, investment, and cross-border payments.

With other ASEAN countries following the lead of Indonesia, Thailand, and Malaysia in using LCS, it could enhance economic resilience in this region. This impact will directly influence the global economy in the area. The adoption of LCS in the ASEAN region will expedite the economic recovery process of member countries by decreasing the reliance on the US dollar in transactions.

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