Malaysia, Thailand central banks start local currency settlement

BANGKOK, March 15 (TNA) -- Central banks of Thailand and its neighbour Malaysia have begun local currency settlement to promote the use of baht and ringgit, marking a key milestone in strengthening financial cooperation between the two countries. According to the statement of The Bank of Thailand and the Bank Negara Malaysia on Monday, the local currency settlement framework following the memorandum of understanding (MoU) signed between the two central banks last August. Under the agreement, Thai and Malaysian businesses will be allowed to use services in their home countries to settle trade transactions. The introduction of the framework allows for greater efficiency in accessing the local currencies and managing exchange rate risks arising from trade transactions. In Malaysia, businessmen can use services from Bangkok Bank Berhad, CIMB Bank Berhad and the Malayan Banking Berhad. In Thailand, they services are available at Bangkok Bank Pcl, the CIMB Thai Bank Pcl and the Kasikornbank Pcl. Given that this is a pilot project, only banks that fulfill key qualifications are selected to ensure success and smooth operations of the project. These qualifications include strong business links between both countries, presence of branches in both countries or high volumes of trade in ringgit and baht. In addition, these banks have been granted the necessary flexibilities to provide a greater range of financial services which include ringgit and baht deposits, trade financing and hedging products. (TNA)