Asian Clearing Union to launch SWIFT alternative in June

The Asian Clearing Union (ACU) plans to launch a new cross-border financial messaging system in June as an alternative to SWIFT, marking another major move to establish new payment mechanisms amid the accelerated global de-dollarization push. Deputy Governor of Central Bank of Iran Mohsen Karimi said that the payment system is capable of completely replacing SWIFT and could facilitate the global de-dollarization push. The new financial system will be used only by ACU member states but other countries could apply for membership. The ACU was established in 1974 as a payment arrangement through which participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis, according to ACU's website. ACU currently has nine members including India, Iran, and Pakistan.

Multiple emerging economies have been decreasing their holdings of U.S. dollar assets and reducing the use of U.S. dollars for international settlements while further diversifying their foreign reserves, reflecting a declining trust from global economies in making settlements in U.S. dollars, Liang Haiming, Dean of Hainan University's Belt and Road Research Institute, told the Global Times. Pan Helin, Director of the Research Center for Digital Economics and Financial Innovation affiliated with Zhejiang University's International Business School, said that the U.S.' inability to maintain the international status of its currency also contributed to the trend, adding that he expected the U.S. dollar to continue to weaken. Pan stressed that the major direction for the global payment system will be an increase in membership and enhanced convenience of cross-border payment, which will gradually replace the function of the U.S. dollar and SWIFT in the sector and offer an additional choice to users worldwide, the Global Times reports.