Jakarta, CNBC Indonesia – Bank Indonesia (BI) claimed to have completed transactions using local currency between countries or local currency settlement (LCS) for Indonesia and China.
BI Governor Perry Warjiyo stated that all requirements and technical operations of the LCS between Indonesia and China had been completed. In fact, the central bank has appointed several banks to support Indonesia-China LCS transactions.
“The technical appointment of the bank has been completed, as well as the technical mechanism,” Perry said at a press conference to announce the results of the July Edition of the Board of Governors’ Meeting (RDG), Thursday (22/7/2021).
Bi, continued Perry, has even carried out socialization to ministries, institutions and the business world. According to him, LCS can increase national exports in the future.
“God willing, LCS will contribute to boosting exports,” said the former Deputy Governor of BI.
LCS itself is a collaboration between the Indonesian central bank and a number of central banks of other countries. This cooperation allows the use of local currency whenever a bilateral trade or investment transaction takes place.
With LCS cooperation, the two countries can both reduce dependence on the United States (US) dollar. This means that in every transaction, the two countries no longer need to exchange dollars as is currently done.
The LCS transactions include the use of direct exchange rate quotes, as well as interbank trading for the currencies of these countries and Indonesia. In addition, there is also regular sharing of information and discussions between authorities.
The cooperation between BI and the People’s Bank of China (PBOC) has been stated in a memorandum of understanding signed in October 2020.
(Cha Cha dance)
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