Indonesia, RoK to use local currencies for transactions
Bank Indonesia (BI) and the Bank of Korea (BOK) on December 10 embarked on a groundbreaking collaboration aimed at utilising local currencies for financial and economic transactions.
Bank Indonesia Governor Perry Warjiyo (right) shakes hands with Bank of Korea Governor Rhee Chang-yong (Photo:kompas.id)
Jakarta (VNA) – Bank Indonesia (BI) and the Bank of Korea (BOK) on December10 ꦦembarked on a groundbr♋eaking collaboration aimed at utilising localcurrencies for financial and economic transactions.
The initiative, referred toas a Local Currency Transaction (LCT) framework, is slated for implementationby 2024. The objective of this venture is expected to streamline cross-borderpayment settlements in trade and to minimise the exposure to exchange raterisks and costs for businesses and other users. The two banks signed amemorandum of understanding in Seoul in May to lay out a framework for KRW-IDRtransactions for direct investment, as well as other functions. BI Governor Perry Warjiyoaffirmed that the initiative aims at encouraging the use of local currencythrough the LCT framework. According to him, through theimplementation of this LCT cooperation framework, trade between Indonesia andthe RoK can use direct exchange rates provided by Appointed Cross-CurrencyDealers (ACCDs). This will provide more options for businesses and increasetransaction efficiency while strengthening bilateral financial cooperationbetween the two countries. BOK Governor Rhee Chang-yonghighlighted the strategic role of Indonesia in the global supply chain,particularly in advanced sectors like batteries and electric vehicles. The LCTframework is expected to further fuel this trend. The use of local currenciesin transactions is anticipated to bolster macroeconomic stability and financialcooperation between Indonesia and the RoK. Although the LCT initiativebetween BI and BOK is the first of its kind, it is not the first time a localcurrency transactionframework has been implemented. BI has previously rolledout similar frameworks with other Asian countries, including Malaysia,Thailand, Japan, and China./.
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Bank Indonesia Governor Perry Warjiyo (right) shakes hands with Bank of Korea Governor Rhee Chang-yong (Photo:kompas.id) 
