KUALA LUMPUR: Developing and strengthening the domestic financial market is crucial for the Asean Plus Three (Asean+3) member countries to reduce the US dollar dependency in the region, thus helping to minimise vulnerability over external shocks, reported Bernama.

       The news agency quoted Economic Research Institute representative director and director-general for North-East Asia Masahiro Kawai as saying Asean+3 economies have been making progressive steps toward moving away from the US dollar, albeit at a slow pace, because of the currency’s attractiveness.

       He said as countries strengthen their financial market, there is huge potential for domestic currencies to be used for international transactions, especially for countries that make efforts to internationalise their currencies, which Japan, China and Thailand did in the early 1990s, the report noted.

       “I believe that developing and strengthening the domestic financial market is the most important direction, but it takes time.

       “One cannot immediately jump away from the US dollar dependence towards regional currencies use.

       “Therefore, for the time being, Asean+3 economies have to continue to strengthen its policy framework to manage US dollar dominance in the international monetary system,” he said at the Asian Development Bank’s (ADB) Asian Impact webinar.

       He noted that the Thai baht is currently the most developed financial market in Indochina, according to Bernama.

       The economist said a large capital outflow and inflow would create pressure on the financial market of individual economies, as such a stronger policy framework for macro-financial stability is important.