KUALA LUMPUR — Four Southeast Asian central banks have signed a memorandum of understanding (MoU) to strengthen cooperation in promoting the use of local currencies for cross-border transactions, including trade and investment.
The MoU was signed today by Bank Negara Malaysia (BNM) Governor Abdul Rasheed Ghaffour, Bank Indonesia (BI) Governor Destry Damayanti, Bank of Thailand (BOT) Governor Vitai Ratanakorn and Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr.
The agreement establishes a framework for cooperation among the four central banks under the Local Currency Transaction (LCT) Framework, aimed at facilitating the use of local currencies in settling bilateral transactions between the participating jurisdictions.
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It covers trade, investment and other eligible transactions, and supersedes the previous bilateral memoranda of understanding on the Framework for Cooperation to Promote Bilateral Transactions in Local Currencies signed by BNM, BI and BOT in August 2023.
The initiative is expected to improve the efficiency of cross-border settlements, reduce costs associated with multiple currency conversions and give businesses and other market participants greater flexibility in managing foreign exchange risks.
The four central banks will continue to work together to advance the development and implementation of the LCT Framework, with the aim of gradually expanding local currency transactions to support economic activities, strengthen regional financial cooperation and enhance economic resilience.
