The hegemony of the United States dollar (USD) seems to diminish in the time to come. Two Asian countries, Malaysia and China are trying to overcome the USD hegemony and move ahead in the discussions of alternative options.
China opposed the United States on every front from defense services to technological advancements but now it is trying to deal with Malaysia to reduce the hegemony of the USD. On 4 April, Malaysian Prime Minister Anwar Ibrahim said that China is ready to talk to form an Asian Monetary Fund. According to the reports, Chinese President Xi Jinping welcomed the proposal of the Asian Monetary Fund during the Boao Forum in Hainan. After Covid 19 it was the first visit of the Malaysian Prime Minister to China to improve ties.
In Malaysia, there’s strong resistance against the USD currently, and looking for an alternative payment system. Anwar Ibrahim in his statement released during the forum said that there’s no reason to continue depending on dollars. Additionally, he informed that the Malaysian central bank is already working towards finding solutions for trade between the two nations in ringgit and renminbi.
According to the Malaysian Prime Minister, China’s president took his suggestions seriously and welcomed the proposal to form an alternative agency. Many other nations in the region want to keep themselves away from the dollar and International Monetary Fund (IMF).
Some Southeast Asian countries like Singapore are trying to move from dollar usage and shifting towards other available options. According to former Singapore officials, the dollar is still dominant in the region and weakened the currency. Additionally, they are worried that USD has become a tool of economic statecraft that might harm national interests.
There’s also a pending proposal of China’s ambition to launch an “Asian yuan” which will work in Asian countries to reduce dependability on the United States dollar. The envisioned “Asian yuan” token, which would be supported by distributed ledger technology, is intended to lessen Asia’s reliance on the U.S. dollar in global trade. Anwar Ibrahim’s statement could be seen as a signal for upcoming developments in the Asian continent in monetary policy.
The USD played a crucial role in international trade for a long time. However, in recent times there’s been an effort to replace the dollar and resist American hegemony after Russia’s war with Ukraine. It was adopted as an official currency reserve by 44 allied nations in 1944 at Bretton Woods Agreement. A few days back, Alexander Babakov, the deputy chairman of the State Duma hinted that the BRICS nations are in the process of creating a new medium of transaction. If this happens, it will be a big setback for the USD hegemony as BRICS nations contribute 40% of the world’s population and 24% of the GDP.