RI-Malaysia Update Bilateral Swap Agreement In Local Currency Reaches IDR 82 Trillion

JAKARTA - Bank Indonesia (BI) and Bank Negara Malaysia (BNM) have agreed to renew the bilateral swap agreement in local currency or Local Currency Bilateral Swap Arrangement (LCBSA).

The existence of an LCBSA update allows local currency exchanges between the two central banks to RM24 billion or Rp82 trillion for the next five years.

The agreement was signed by BI Governor Perry Warjiyo and BNM Dato Seri Governor Abdul Rasheed Ghaffour in a high-level bilateral meeting held in Jakarta on Friday, September 27.

During the bilateral meeting, the leaders of the two central banks discussed policy directions that include macroeconomic, monetary and financial, payment and digitization systems, as well as strategies to advance Islamic finance.

BI Governor Perry Warjiyo said Bank Indonesia views the increase in bilateral swap cooperation in local currency (LCBSA) with BNM as representing the important role of international cooperation as part of the Bank Indonesia policy mix that supports key policies in the monetary, macroprudential, and payment systems.

"And at the same time contribute to the development of local currency-based transactions between the two countries," he said in his statement, Friday, September 27.

The renewal of the LBCSA BI and BNM cooperation is a shared aspiration of the two parties after the LCBSA cooperation was first implemented in 2019 and extended in 2022, as well as being part of continuous efforts to strengthen the cooperation between the two central banks that has existed for a long time.

Perry said this agreement reflects collaborative efforts to strengthen external resilience while at the same time supporting the use of local currencies in trade transactions and investments between the two countries.

Responding to this, BNM Governor Dato Seri Abdul Rasheed Ghaffour said, along with the increasing trade and financial interconnection between Malaysia and Indonesia, his party welcomed the agreement to continue working with BI through this renewal of the LCBSA agreement.

"LCBSA cooperation complements local currency-based transaction cooperation or Local Currency Transaction (LCT) which has been running and is currently the main scheme in the completion of trade transactions and investment in the currency of each country," he said.