China and Malaysia Discuss Proposal for Asian Monetary Fund to Distance from US Dollar Hegemony

In the Brief:

  • China and Malaysia are discussing the creation of an Asian Monetary Fund to challenge the US dollar's dominance in trade.
  • Malaysia is already working with China to conduct trade in their own currencies, and other countries are also seeking to move away from the dollar.
  • The end of the dollar as the world's reserve currency could impact its value and the stablecoin market.

3 - 5 minute read

As the world’s largest economy, the United States has been the dominant player in global trade for decades. However, recent geopolitical tensions have fueled a growing movement among nations to challenge the U.S. dollar’s hegemony in international trade. In this article, we explore the latest development in this trend: China and Malaysia are considering creating an Asian Monetary Fund to distance themselves from the dollar and the International Monetary Fund (IMF).

According to Bloomberg, the idea of an Asian Monetary Fund was discussed at a forum on the Chinese island province of Hainan. Malaysian Prime Minister Anwar Ibrahim reportedly said that China’s President Xi Jinping welcomed discussions on the proposed agency. The fund would help Asian nations to reduce their dependence on the dollar and the IMF.

Malaysia is among several Asian nations that are trying to detach themselves from dollar dependence. Its central bank is already working with the People’s Bank of China to conduct trade in their own respective currencies. Furthermore, Anwar Ibrahim believes that the time is right for an Asian Monetary Fund, stating, “Now with the strength of the economies in China, Japan, and others, I think we should discuss this — at least consider an Asian Monetary Fund, and, secondly, the use of our respective currencies.”

China and Brazil’s Currency Agreement

China and Brazil made an agreement in late March to transact solely in their own currencies, cutting out the greenback completely. This move could be seen as an attempt to distance themselves from the dollar’s influence.

According to Cointelegraph, a Russian state official spoke of a new currency for the BRICS alliance. This alliance incorporates the burgeoning economies of Brazil, Russia, India, China, and South Africa. The proposed currency is another effort to distance itself from the dollar.

In October 2022, Chinese government researchers proposed a digital currency based on a basket of Asian currencies. The proposed currency would further reduce dependence on the dollar.

According to South China Morning Post Columnist Alex Lo, there could be additional reasons for dollar distancing. Lo said more countries want to move away from the U.S. dollar, not just for economic reasons, but to “escape the clutches of the gangsterism of U.S. foreign policy, which in the past two decades has weaponized its global dollar dominance with increasing abandon.” This sentiment is shared by many nations, and it’s driving them to seek alternatives to the dollar in global trade.

What This Means for Traders

The end of the dollar as the world’s reserve currency could have a severe impact on its value compared to other currencies and crypto assets. It could have a knock-on effect on the $133 billion stablecoin market, which is dominated by dollar-pegged stablecoins. Traders should be aware of these developments and adjust their strategies accordingly. However, it’s important to note that trading carries high risk, and we are not financial advisors.


The movement to challenge the U.S. dollar’s hegemony in international trade is gaining momentum. The proposed Asian Monetary Fund is just one of many efforts to distance nations from dollar dependence. As geopolitical tensions continue to rise, traders should stay informed and be prepared for potential changes in the global financial landscape.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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