• Indonesia is following the lead of the BRICS nations and shifting away from the US dollar in trade and financial transactions.
• Bank of Indonesia Governor Perry Warjiyo confirmed that Jakarta has implemented a local currency trade (LCT) system to diversify their currency use.
• U.S. Treasury Secretary Janet Yellen recently admitted that economic sanctions used against countries by the U.S. put the dollar’s dominance at risk.
Indonesia Is Following BRICS De-Dollarization Lead
The BRICS nations (Brazil, Russia, India, China, and South Africa) have been ramping up de-dollarization efforts to reduce their reliance on the US dollar in international trade and financial transactions. Bank of Indonesia Governor Perry Warjiyo confirmed Friday that Jakarta has implemented a local currency trade (LCT) system to diversify their currency use and follow the lead of the BRICS bloc in de-dollarization efforts.
BRICS Common Currency
In addition to reducing reliance on USD, BRICS are also working towards creating a new common currency to replace it for international trade settlements and financial transactions. The idea is yet to be finalized but could potentially reduce dependence on USD even further in near future among these countries.
Indonesia’s Local Currency Trade System
Warjiyo said that Indonesia’s LCT system is more concrete than the BRICS de-dollarization approach as they have already implemented it with several nations including Thailand, Malaysia, China, and Japan plus an agreement with South Korea regarding local currency transactions is set to be signed early May this year according to him.
Sanctions Risk Dollar Dominance
U.S Treasury Secretary Janet Yellen recently acknowledged that economic sanctions imposed by the United States puts its own currency dominance at risk as other countries look for alternatives such as creating new common currencies or using local currencies instead of USD for international trades or payments .
It’s clear from recent events that many countries are taking steps towards reducing their dependence on US dollars for international trading purposes which could have an adverse effect on its long standing status as global reserve currency if these measures materialize into something bigger over time .