This is what we call currency diversification, which supports monetary stability, exchange rate, and global financial system stability.
Jakarta (ANTARA) - Bank Indonesia (BI) has continued to expand local currency use or local currency transaction (LCT) cooperation to support monetary stability.

BI Governor Perry Warjiyo delivered the remarks at the Financial System Stability Committee's press conference here on Monday.

Data from the International Monetary Fund (IMF) has shown a continued decline in the use of the United States dollar. At one point earlier, it reached 70 percent and now, the use of the greenback is around 50 percent.

"This is what we call currency diversification, which supports monetary stability, exchange rate, and global financial system stability," Warjiyo explained.

It is undeniable that most transactions in the world still use the dollar, he noted. Despite this, the BI will continue to encourage the expansion of LCT cooperation.

According to Warjiyo, the expansion of LCT cooperation will also extend to countries outside ASEAN, such as China, Japan, and South Korea.

Through local currency use, the trade exchange cost can be made cheaper and the exchange rate risk can also be lowered, he explained.

"Earlier, it has to be converted to dollar, then from dollar to local currency. Now, we do not have to go through the dollar again. This will continue to be done. This is also done in various countries," Warjiyo said.

Moreover, the use local of currency can also be carried out through efficient methods, such as by using QR codes connected with electronic devices, he added.

"Thus, the transaction cost will become cheaper and the exchange rate will also become better," he said.

LCT is among the agreements reached between countries within ASEAN+3 to strengthen financial cooperation in the region. The ASEAN+3 countries comprise the 10 Southeast Asian countries as well as China, Japan, and South Korea.

LCT intends to reduce dependency on the US dollar, which can strengthen the stability of each member countries' currency.

Indonesia has currently established LCT cooperation with five countries: Malaysia, Thailand, Japan, China, and South Korea.

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Translator: Imamatul S, Fadhli Ruhman
Editor: Rahmad Nasution
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