Explainer | Has Asia just taken a step away from the US dollar?

Asia’s largest economies have broken new ground by approving an emergency financing tool using the yuan and other local currencies

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China is accelerating its efforts to expand the role of the yuan as a global currency amid an intensifying trade war with the United States. Photo: Getty Images

Published: 7:00am, 7 May 2025

Asia’s largest economies made a decision that could signal a shift away from the US dollar on Sunday, as they approved a new rapid financing mechanism that will for the first time use regional currencies including the Chinese yuan.

The new scheme has been rapidly approved as countries across East and Southeast Asia look to shield themselves from the financial volatility unleashed by US President Donald Trump’s global tariff war, which has triggered turbulence in the US Treasuries market and an Asian currency rally in recent days.

It may also herald a deeper, longer-term shift towards a regional monetary mechanism that is less reliant on the dollar – and gives China a bigger role.

In this explainer, the Post breaks down the details of the new financing mechanism, and what it means for the future of Asia and the dollar-based global financial system.

What is the context behind this decision?

The new rapid financing mechanism is part of a broader scheme known as the Chiang Mai Initiative Multilatalisation (CMIM) – a currency swap arrangement among the 10-member Association of Southeast Asian Nations (Asean), China, Japan and South Korean.

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