A new report from SINDOnews reveals that according to its central bank, Indonesia is following the BRICS nations, and shifting its means of international trade settlement away from the US dollar.
Citing Bank of Indonesia Governor Perry Warjiyo, the report notes the independent republic has now introduced transactions in the local currency as a means of settling cross-border trades.
On Friday, speaking to a press conference at the board of governors meeting, Warjiyo said, “Indonesia has initiated diversification of the use of currency in the form of LCT [local currency trading]. The direction is the same as the BRICS. In fact, Indonesia is more concrete.”
He added that Indonesia has already implemented the system with several countries, including Thailand, Malaysia, China, and Japan. In early May, it is expected the nation will sign a cooperation agreement with South Korea to settle trade in local currencies.
At the same time Warjiyo was making these statements, the BRICS economic bloc, made up of Brazil, Russia, India, China, and South Africa is developing a joint payment network which will allow its members to reduce their reliance on Western financial tools, especially the US dollar. The member nations have already been making greater use of local currencies in mutual trade, and also developing a new reserve currency.
Brazil and China already had agreed in writing to trade in their own currencies, leaving the US dollar completely behind.
China recently has increased its efforts to eliminate its reliance on the dollar as a tool of trade settlement, after witnessing the sweeping sanctions levied by the Western powers against Russia, its trading partner and a major global supplier of energy. India as well has begun to trade in both rubles and rupees to settle its mutual trade with the Kremlin.
The move towards de-dollarization in international trade received its first major boost in 2014, as Russia began to de-dollarize its economy after the Western powers issued the first round of sanctions against Moscow over the situation in Crimea.
When the West began to impose new sanctions in 2022, Moscow began building on the steps taken following the sanctions of 2014, boosting the use of alternative currencies in transactions.
More recently, Russian President Vladimir Putin suggested using the Chinese yuan more widely, in trade with China, but also in Russia’s trade with other countries, such as Africa or Latin America.
Since then the share of the yuan used in Russia’s international trade settlement has only increased.
