Regional Cooperation To Promote Local Currency Settlement

KUALA LUMPUR, April 5 (Bernama) -- Bank Negara Malaysia (BNM) or Central Bank of Malaysia, Bank Indonesia, Bangko Sentral ng Pilipinas and Bank of Thailand are looking at the possibility of establishing Local Currency Settlement Frameworks between the four countries. The four central banks Friday signed three pairs of bilateral Letters of Intent (LOIs) on the framework, namely LOI between Bangko Sentral ng Pilipinas governor Benjamin E. Diokno and Bank Indonesia governor Perry Warjiyo, LOI between Diokno and BNM governor Nor Shamsiah Yunus, as well as, LOI between Diokno and Bank of Thailand governor Veerathai Santiprabhob. In a joint statement, the four central banks said Bank Indonesia and Bank of Thailand have agreed to start exploring the possibility of expanding the scope of their existing local currency settlement framework. “The use of local currencies in settlement of trade and other areas intends to reduce transaction costs and foreign exchange risks particularly amidst the current volatility faced by currencies in advanced economies. “Moreover, the wider use of local currencies in the ASEAN Economic Community enhances economic and financial integration, as well as spurs further development of the foreign exchange and financial markets, within the region,” they added. -- BERNAMA