The signing was held during a bilateral meeting between Bank Negara Malaysia (BNM) and Bank Indonesia (BI) in Kuala Lumpur, Friday, September 27. The agreements are (i) Local currency bilateral swap agreement (LCBSA), which will enable both central banks to access foreign currency liquidity from each other if needed; and (ii) a Memorandum of Understanding (MoU) to forge closer cooperation on innovation in payments and digital financial services, as well as surveillance on anti-money laundering and counter financing of terrorism (AML/CFT).
The LCBSA allows for the exchange of local currencies between the central banks of up to RM8 billion or IDR28 trillion (around USD 2 billion), Executive Director of BI Communication Department, Onny Widjanarko, said in a statement received in Jakarta Friday.
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This will complement efforts to support the wider usage of local currencies to facilitate cross-border economic activity between the two countries, he remarked.
The effective period of the arrangement is three years and it can be extended by mutual agreement of the respective central banks.
Moving in tandem with the increasing interdependence of technological advancements in financial services, the MoU reaffirmed the commitment of both central banks in supporting the development of payment systems and digital financial innovation as part of initiatives to advance financial development and integration between the two countries.
The meeting also discussed recent economic and financial developments, including those in the areas of Islamic finance, social financing and financial market development, Widjanarko remarked.
At the end of the meeting, the central banks affirmed their commitment to strengthening cooperation between both nations to further enhance financial sector development in achieving sustainable economic progress.
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