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ASEAN local currency settlement guideline in the works, says BI
Indonesia, Malaysia, Thailand and the Philippines have committed to use local currencies in bilateral trade.
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An employee counts rupiah bills at a money changer in Jakarta. Some ASEAN members have agreed to use local currencies in bilateral trade. (Antara/Sigid Kurniawan)
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SEAN is looking to expand the use of local currencies to settle trade and direct investment between member countries in a bid to stabilize the region’s financial market.
Bank Indonesia (BI) is drafting a local currency settlement framework guideline that will enable the use of local currencies to settle trade and direct investments between ASEAN member countries.
BI international department deputy director Haris Munandar said the central bank was giving suggestions on the drafting of the ASEAN local currency settlement (LCS) framework guideline.
“We want to expand the use of local currency in bilateral trade and direct investments to more countries in the region,” he said during a press briefing in Jakarta on Tuesday.
Only Indonesia, Malaysia, Thailand and most recently the Philippines have committed to promoting the use of local currencies in bilateral trade under the LCS.
BI international department director Wahyu Purnomo said Indonesia had implemented the framework with Malaysia and Thailand in 2017 and the three countries recently agreed to implement the framework with the Philippines during the ASEAN Finance Minister and Central Bank Governors Meeting in Chiang Rai, Thailand, last week.
He said the framework between the four countries was only applicable to bilateral trade. However, he added the LCS framework would also be applicable to direct investments between the four countries.
