Jakarta (ANTARA) - Bank Indonesia (BI), Bank Negara Malaysia, and Bank of Thailand signed a Local Currency Transaction (LCT) agreement for collaboration to strengthen the use of local currency in cross-border transactions.

The cooperation involves bilateral transactions between Indonesia and Thailand, Indonesia and Malaysia, and Thailand and Malaysia.

"The previous one was Local Currency Settlement (LCS). However, that only includes trade and direct investment," BI Governor Perry Warjiyo remarked after the signing of the LCT memorandum of understanding (MoU) between the BI governor and several members of the Board of Governors of ASEAN Central Banks here on Friday.

"Now, we are expanding it to include cross-border financial transactions,” he remarked.

The agreement on strengthening LCT aims to facilitate access to cross-border payments in order to more efficiently complete transactions in local currency.

The BI governor believes that this cooperation marks a major milestone in strengthening cross-border transactions between Indonesia, Malaysia, and Thailand.

The three central banks believe that this will positively contribute to the stability of financial markets as well as the deepening of financial markets in local currencies in the three countries.

LCT is a cooperation program that aims to reduce dependence on the US dollar so as to strengthen the currency stability of each member country.

Indonesia seeks to optimize the momentum of its 2023 ASEAN Chairmanship to continue to encourage the integration of ASEAN countries in the economic sector, including the LCT cooperation.

This was reflected in the agenda of the signing of the LCT cooperation agreement that was carried out on the sidelines of the 10th ASEAN Finance Ministers and Central Bank Governors (AFMGM) Meeting in Jakarta, Indonesia.

The MoU was inked by Governor of BI Perry Warjiyo, Governor of Bank Negara Malaysia Abdul Rasheed Ghaffour, and Governor of Bank of Thailand Sethaput Suthiwartnarueput.

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Translator: Imamatul Silfia, Katriana
Editor: Azis Kurmala
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