Pune: The Asia Economic Dialogue (AED) 2025 featured an insightful session on ‘International Monetary System: Challenges and Reforms’, where experts debated the growing debt burden faced by economies reliant on the US dollar and explored alternative currency frameworks.

Prof. Ajay Shah, Co-founder, XKDR Forum, chaired the session, with contributions from: Dammu Ravi, Secretary (Economic Relations), MEA, India, Dr. Amita Yadwadkar, Assistant Professor, Department of Economics, Savitribai Phule Pune University (SPPU), Radha Shyam Ratho, Executive Director, Reserve Bank of India (RBI) and Anita Prakash, Director, Partnership, Economic Research Institute for ASEAN and East Asia (ERIA).

Dammu Ravi underscored the impact of post-pandemic trade disruptions on nations reliant on dollar-based transactions, highlighting that rising debt servicing costs are straining economies with limited forex reserves. He noted that many countries are now exploring currency diversification strategies, including discussions around a BRICS currency, to reduce dependence on the USD.

Local Currency Trade & UPI: Alternative Payment Solutions

As nations look for ways to conserve forex reserves, Dr. Amita Yadwadkar suggested that trade agreements using local currencies and expanding India's Unified Payments Interface (UPI) globally could offer viable solutions. This could enable cross-border digital transactions without reliance on the US dollar.

Geopolitical Challenges Driving Digital Currency Innovation

Radha Shyam Ratho highlighted how economic sanctions and restricted access to the SWIFT payment system—as witnessed during the Russia-Ukraine crisis—are prompting central banks to consider alternative payment mechanisms. He emphasized that Central Bank Digital Currencies (CBDCs) could offer a secure and stable digital alternative for international trade and cross-border transactions.

Global Trade & The Persistent Role of USD

Anita Prakash acknowledged that in the current global supply chain model, where production occurs across multiple countries, the US dollar remains integral to international trade. However, she cautioned that dollar appreciation can negatively impact local economies, making it essential for nations to cooperate on financial stability measures while exploring alternative currency arrangements.