By: Muhammad kashif
A new mysterious diplomatic era has been started for the Asian countries. In the first century of the third millennium, many great powers emerged in the Asian terrain while the chapter of the glory of some countries in the world is on the brink of decline. New coinage is settling to derail and challenge the hegemony of prevailing coin; as BRICS countries have shown interest to revive the plan of the Asian Monetary Fund. Malaysia, Japan, and many others countries are also switching towards a new currency and have disclosed their plan to ditch the supremacy of the IMF and the US dollar.
The economical hegemony of the International Monetary Fund (IMF) and the US dollar started in 1944 after WWII, in which 44 allied countries met, built a system, and mutually agreed on staple rules that will shape the global economy. The allies also agreed to a new exchange rate system, each country figures the worth of its coinage to the US dollar.
The main purpose of the IMF was to provide emergency loans to the affected countries, but it was criticized by many countries, for its unjust distribution of money and inappropriate for the regional context. Many Asian countries felt that IMF policies aggravated the economic downturn of their countries. Another factor that compiled the Asian nations to think for AMF is the ascendancy of Western countries over IMF.
Asian Monetary Fund (AMF) is a proposed regional financial institution aimed at encouraging financial stability and economic enhancement in Asia. For the first time in history, Japan sensed the need for an hour to start a marathon for the AMF; during the bout of 1997 Asian financial crises. The Tokyo representative at the occasion of the G7 IMF meeting in Hong Kong suggested that “an institution be formed to work towards setting up a regional network funded by Asian countries to overcome current and future economic crises.”
The proposal to establish AMF at that time, led to myriad thwart and scathing from Washington and many European countries. Another ill-fated thing was that Beijing was also reluctant to back Tokyo’s proposal, as they were well aware of DOA (dead on arrival). Due to these deterrents, AMF was not established at that time.
In the contemporary political atmosphere, Malaysia reveals its plan to set up Asian Monetary Fund. In the previous month on 31st March, Malaysian Prime Minister, Anwar Ibrahim had a meeting with Chinese President XI Jinping to exchange ideas with him regarding AMF.
After meeting up with XI Jingping, Anwar Ibrahim informed his parliament that “when I had a meeting with XI Jingping, he immediately respond ‘I refer to Anwar Ibrahim’s proposal on the Asian Monetary Fund’ and he welcomed discussions.”
BRICS (Brazil, Russia, India, China, and South Africa), organized in 2010, currently representing 41% of the world population, 24% of the world GDP, and more than 16% of the world trade, are planning for a joint currency and to dump the dominance of IMF and US dollar.
China is at the forefront to vanquish the hegemony of the dollar and internationalize the Yuan. According to a report, China is pursuing a string of deals and has entered into bilateral currency swap agreements with 41 countries around the world from 2009 to 2020 with a total amount of RMB 3.5 trillion ($ 554 trillion). The latest one is with Brazil, as they have decided to use their currency for trade.
Moscow government is also pushing this idea from last year. Quoting words Russian Prime Vladimir Putin, Proclaimed in the previous year “The matter of creating the international reserve currency based on the basket of currencies of our countries is under review.”
In January, the statement came from the office of the Russian finance minister; some pivotal words from his statement were as “serious self-respecting countries are well aware of what is at stake; want to create their mechanism to ensure sustainable development. It’s in this direction that initiatives have been voiced recently about the need to think about creating their currencies within the framework of BRICS.”
Alexander Babakov, the deputy chairman of the Russian State Duma said in a recent interview that “The transition to settlements in national currencies is the first step. The next one is to provide the circulation of digital or any other form of a fundamentally new currency in the nearest future.”
Newscasts are now getting steam that Russians are striving to hold the BRICS summit for the final step towards the foundation of the Asian Monetary Fund, which is likely to be happening in August in South Africa.
The establishment of the Asian Monetary Fund will glitter the fortune of Asian countries as it will be owned and operated by these countries. AMF is supposed to be an alternative to IMF that will be like a self-help mechanism for Asian nations.
The sole purpose of these countries behind the groundwork of AMF is to reduce reliance on the IMF, provide loans to member countries facing currency crises, to promote regional economic cooperation and exchange rate permanency.
All in all, Asian Monetary Fund will bring economic prosperity and independency from the Western countries, and gain more depiction in the management of the global financial system.
The writer is a student of history at Quaid-i-Azam University, Islamabad. He tweets at @iamk_quaidian