"The implementation of the LCT framework between Indonesia and South Korea would mark a crucial achievement in the two countries' financial cooperation ties," head of the BI's department of communication, Erwin Haryono, said in Jakarta on Friday.
The agreed framework is a follow-up to a memorandum of understanding and an operational framework agreement signed in May 2023 and June 2024, respectively.
The LCT framework, which is expected to promote the use of the Indonesian rupiah and the South Korean won in bilateral trade transactions, will come into effect on September 30 this year.
According to Haryono, the framework will strengthen the interconnection among appointed cross-currency dealer (ACCD) banks, and ultimately support the use of local Indonesian and South Korean currencies in commerce.
The official further said that the LCT deal is meant to support direct quotation between rupiah and won, adding that the implementation of the framework is expected to result in intensified bilateral trade activities, reduced exposure to exchange rate risks, and more efficient transactions.
Bank Indonesia and Bank of Korea, as the central banks of the two countries, have designated a number of Indonesian and South Korean banks as ACCDs that will support the implementation of the LCT framework.
The Indonesian ACCD banks comprise:
- Bank Mandiri
- Bank Negara Indonesia (BNI)
- Bank Rakyat Indonesia (BRI)
- Bank Central Asia
- Bank CIMB
- Bank BTPN
- Bank Maybank Indonesia
- Bank OCBC NISP
- Bank DBS Indonesia
- Bank Woori Saudara Indonesia
- Bank KEB Hana Indonesia
- Bank Shinhan Indonesia
- Bank IBK Indonesia
- Bank Shinhan Indonesia
- Bank KB Bukopin
The South Korean ACCD banks are:
- Woori Bank
- KEB Hana Bank Seoul
- Shinhan Bank Seoul
- Industrial Bank of Korea
- Kookmin Bank
- SMBC Seoul
- Seoul Branch of BNI
Related news: BI, Bank of Korea cooperate to encourage local currency use
Translator: Martha H, Tegar Nurfitra
Editor: Rahmad Nasution
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