Asian economies are gradually diversifying their trade and financial systems away from heavy reliance on the US dollar, as geopolitical tensions, regional supply chains and digital financial technologies reshape the global monetary system.
The shift is not aimed at replacing the dollar, which remains the dominant currency for trade, foreign exchange transactions and official reserves across the region.
Instead, policymakers are seeking alternative channels that can make Asian economies more resilient to external shocks while allowing regional currencies and payment systems to play a greater role.
The analysis by Dong He, chief economist at the ASEAN+3 Macroeconomic Research Office (AMRO), was featured in the September 2026 edition of the IMF’s Finance & Development magazine, in an update by the IMF on September 13.
The ASEAN+3 grouping brings together the 10 ASEAN member states — Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — alongside China, Japan and South Korea. Collectively, the economies account for more than a quarter of the world's population and around a quarter of global economic output.
Despite efforts to diversify, the dollar remains deeply embedded in the region's financial architecture. More than 80 percent of trade invoicing and nearly 85 percent of foreign exchange settlement in ASEAN+3 are conducted in dollars.
More than half of regional banks' cross-border assets and liabilities are also dollar-denominated, while about two-thirds of official reserves are held in the currency.
He says the emerging currency shift should therefore be viewed as a pragmatic effort to build resilience rather than an attempt to challenge the dollar.
Asia's economic structure has changed substantially over the past two decades.
Production networks have become increasingly concentrated within the region, while the importance of the US as a destination for Asian value-added exports has declined.
The share of ASEAN+3 value-added exports going to the US has fallen from nearly one-third two decades ago to about one-fifth today.
At the same time, China and ASEAN now each absorb about 10 percent of regional production, compared with roughly 6 percent previously.
The changing trade patterns are encouraging governments and businesses to develop financial systems that better reflect the region's increasingly interconnected economies.
One of the key developments has been the expansion of local-currency settlement arrangements.
These allow businesses to conduct cross-border transactions using participating countries' domestic currencies instead of converting payments into dollars.
AMRO has previously argued that wider use of local currencies could strengthen financial resilience, promote trade and investment and reduce dependence on foreign currencies, although regulatory differences, liquidity constraints and market-development challenges remain obstacles.
Asian economies are also connecting their digital payment systems. Singapore's PayNow and Thailand's PromptPay, for example, have been linked to enable faster cross-border payments.
Similar initiatives are expanding across the region, including broader efforts under the Regional Payment Connectivity framework and Project Nexus.
China's renminbi is also becoming an important part of the diversification process.
Beijing has expanded the Cross-Border Interbank Payment System, promoted the digital yuan and increased foreign access to its government bond market, providing additional infrastructure and assets for international users.
Digital finance could accelerate the process further. Project Guardian in Singapore is exploring tokenised financial assets and digital infrastructure, while Project mBridge explored the use of a shared distributed-ledger platform to facilitate wholesale cross-border transactions using central bank digital currencies.
The mBridge project reached a minimum viable product stage in 2024.
Tokenisation could eventually make it easier for different currencies to interact directly without requiring the dollar to serve as an intermediary. Digital systems could also reduce transaction costs and settlement risks by allowing transactions to be completed simultaneously.
However, He argues that the dollar is unlikely to lose its central role in the near future.
The currency continues to benefit from the depth and liquidity of US financial markets, the availability of dollar-denominated safe assets and its role as a global liquidity backstop. These advantages make a complete shift away from the dollar unlikely.
Instead, Asia is moving towards what He describes as a more layered financial architecture, in which the dollar remains central while local currencies, regional payment networks and digital financial platforms assume a larger role.
The development is also being supported at the policy level. At their May 2026 meeting, ASEAN+3 finance ministers and central bank governors backed continued work on cross-border digital payments, including local-currency systems, tokenisation and regulatory frameworks.
The emerging system, He argues, could give Asian economies greater flexibility in managing external shocks while supporting increasingly regionalised trade and supply chains.
Rather than abandoning the dollar, Asia is therefore building additional pathways for trade and finance — creating a more diversified monetary system designed to balance efficiency, financial stability and resilience in an increasingly fragmented global economy.