ASEAN to transition to using local currency in the region to prevent crisis

Jakarta: In an effort to prevent currency spillover from the global crisis, Southeast Asian nations have decided to increase the use of local currencies in the region and decrease their dependence on major international currencies, according to Indonesia's central bank.

The agreement was reached on the final day of an ASEAN (Association of Southeast Asian Nations) gathering of central bank governors and finance ministers, which took place in Bali, Indonesia, on Friday. Indonesia is the ASEAN chair for this year, Xinhua news agency reported.

Governor of Bank Indonesia Perry Warjiyo said the organization would establish a task force to formulate the transition process to use ASEAN local currencies in financial transactions as a realization of ASEAN's current local currencies settlement cooperation framework.

"With the use of local currencies in the transactions across the region, we will be able to strengthen our resilience in supporting regional cross-border trade and investment, which now are still relying on major international currencies," Warjiyo said at a virtual press conference after the meeting.

Warjiyo said if ASEAN countries could use their local currencies in the region, transactions and all payments can be conducted faster and able to tackle the global crisis. And if that is successful, their currencies' values will increase.

"At the moment, our numbers are small. But that's why we must move forward with this scheme. We must accelerate it," Warjiyo said.

He also said that in the meeting, the ASEAN countries have agreed to expand cross-border payment connectivity to more countries in the region.

With inputs from IANS