Central Banks of Indonesia, Malaysia, and Thailand Foster Bilateral Currency Cooperation to Strengthen Regional Economic Ties

Bank Indonesia, Bank Negara Malaysia, and the Bank of Thailand have collectively signed bilateral MoUs to foster cross-border transactions in local currencies, signaling a progressive shift from earlier agreements. The enhanced framework not only covers a broader spectrum of eligible cross-border transactions but also aligns with cross-border payment initiatives, aiming to bolster regional financial stability and intensify economic cooperation.

25 August 2023 – In a significant move to enhance economic ties and promote regional financial stability, Bank Indonesia (BI), Bank Negara Malaysia (BNM), and the Bank of Thailand (BOT) have inked a trio of bilateral Memorandum of Understanding (MoUs) on August 25, 2023. These agreements were formalized during the ASEAN Finance Ministers and Central Bank Governors’ Meeting held in Jakarta, Indonesia, signifying a renewed commitment to facilitate bilateral transactions in local currencies between the three nations.

The MoUs were mutually signed by the respective Governors of the central banks: Perry Warjiyo of Bank Indonesia, Abdul Rasheed Ghaffour of Bank Negara Malaysia, and Sethaput Suthiwartnarueput of the Bank of Thailand. The primary focus of these agreements revolves around the creation of a Framework for Cooperation, aimed at bolstering the utilization of local currencies in cross-border transactions, extending beyond the conventional domains of trade and direct investment. This expansion seeks to encompass a wider array of eligible cross-border transactions, which will be progressively implemented. A pivotal facet of the initiative involves aligning this framework with ongoing cross-border payment ventures, thereby facilitating accessible and efficient local currency settlements.

With the broader scope and enhanced cooperation, the tripartite central banks aspire to fortify cross-border economic activities and deepen local currency markets within their respective territories. The newly established MoUs represent a significant evolution from earlier local currency settlement frameworks endorsed by the central banks in 2015 and 2016. The envisaged outcomes encompass intensified cross-border economic collaborations, augmented stability in regional financial markets, and the cultivation of resilient local currency markets, collectively underscoring the commitment of Indonesia, Malaysia, and Thailand towards a strengthened regional economic landscape.

Author: Terry KS

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