The first LOI was between Benjamin E. Diokno, Governor of Bangko Sentral ng Pilipinas, and Perry Warjiyo, Governor of Bank Indonesia; the second one was between Benjamin E. Diokno, Governor of Bangko Sentral ng Pilipinas, and Nor Shamsiah Yunus, Governor of Bank Negara Malaysia; and the third LOI was between Benjamin E. Diokno, Governor of Bangko Sentral ng Pilipinas, and Veerathai Santiprabhob, Governor of the Bank of Thailand.
The three LOIs represent mutual interests with regard to the potential establishment of local currency settlement frameworks between the respective countries of the four central banks, Executive Director of BI Communication Department Onny Widjanarko said in a statement here on Friday.
Bank Indonesia and Bank of Thailand have agreed to start exploring the possibility of expanding the scope of their existing local currency settlement framework, Widjanarko remarked.
He said that the use of local currencies in the settlement of trade and other areas reduces transaction costs and foreign exchange risks, particularly amidst the current volatility faced by currencies.
Moreover, Widjanarko noted that the wider use of local currencies in the ASEAN Economic Community enhances economic and financial integration, and spurs further development of the foreign exchange and financial markets within the region.
The progress toward greater financial integration in the region is a welcome development as we witness the expansion of similar arrangements that were launched in 2017, namely, the Memoranda of Understanding (MoUs) concluded between Bank Indonesia and Bank Negara Malaysia, and between Bank Indonesia and the Bank of Thailand.