Jakarta –
Bank Indonesia, Bank Negara Malaysia and the Bank of Thailand agreed to strengthen cooperation to encourage use local currency each country in bilateral transactions that have been implemented since 2018.
The strengthening of this cooperation was carried out in the signing of the Local Currency Transaction (LCT) Memorandum of Understanding (MoU) by the Governor of Bank Indonesia Perry Warjiyo, Governor of Bank Negara Malaysia Abdul Rasheed Ghaffour, and Governor of Bank of Thailand Sethaput Suthiwartnarueput. .
“This agreement shows the commitment of Bank Indonesia, Bank Negara Malaysia, and Bank of Thailand to strengthen cooperation in the use of local currency in bilateral transactions between the three countries,” said Perry at Hotel Mulia Jakarta, Friday (25/8/2023).
LCT is the use of local currency in cross-border transactions that are broader than the scope of trade and direct investment. This scheme was previously called Local Currency Settlement (LCS), but the name was changed due to an expansion of benefits.
This collaboration marks a major milestone in strengthening cross-border transactions between Indonesia, Malaysia and Thailand. The three central banks believe that this will make a positive contribution to financial market stability and deepening of financial markets in local currencies in the three countries.
“We see the need for a strategy to encourage the use of local currency in bilateral transactions between the three countries,” said Perry.
That way, Indonesia and Malaysia and Thailand will no longer depend on the US dollar in their trade transactions. Heavy reliance on certain dominant currencies in international trade and investment settlements is seen as increasing vulnerability and increasing financial stability risks.
“Therefore, ASEAN+3 needs to innovate to be able to maintain stability amidst high inflation, tighter liquidity conditions, narrower policy space, and the strong influence of the dollar,” Perry said in a written statement, Wednesday (3/5 /2023).
In this regard, Perry stressed the importance of strengthening and increasing cooperation among ASEAN+3 countries in payment connectivity by promoting the wider use of local currencies for transactions.
(aid/kill)
2023-08-25 04:35:46
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