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BI expands currency agreements with Thailand, Malaysia
The AFMGM event also saw the inclusion of Vietnam into a pact on regional payment integration.
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Bank Indonesia Governor Perry Warjiyo speaks during the annual meeting of Indonesia's central bank with financial stakeholders in Jakarta, on Nov. 30, 2022. (Reuters/Willy Kurniawan)
Bank Indonesia (BI) has expanded local currency agreements with Bank of Thailand and Bank Negara Malaysia.
The three countries signed bilateral memorandums of understanding (MoUs) with one another on local currency transaction (LCT) partnerships on Friday, during the ASEAN Finance Ministers and Central Bank Governors Meeting (AFMGM) in Jakarta.
Indonesia already has bilateral pacts with Malaysia and Thailand since 2018 to settle trade and investment transactions in local currency under a policy referred to as local currency settlements (LCSs).
BI Governor Perry Warjiyo explained the cooperation was now to be expanded from LCSs to LCTs to cover not only settlements for trade and investment but also payments and the purchase of financial products, which would also be done in local currencies.
"In the future, people [in other countries] could use local currency to buy government bonds and other financial asset instruments [in Indonesia]," he said during a different press briefing on Thursday.
BI and its Malaysian and Thai counterparts also have cross-border partnerships to connect Quick Response (QR)-based payment systems, eliminating the need for travelers to exchange money or carry credit cards during visits between those countries.
Indonesia has not so far signed any local currency agreement with fellow ASEAN member Singapore. However, the central banks of the two countries launched a trial on Aug. 17 to connect their QR-based payment systems.
