Indonesia and Japan Expand Use of Local Currency in Bilateral Transactions

JAKARTA - Bank Indonesia (BI) has strengthened cooperation in the use of local currency or Local Currency Transaction (LCT) with Japan.

"This strengthening is marked by the signing of a Memorandum of Understanding between the Japanese Minister of Finance (JMOF) Satsuki Katayama and BI Governor Perry Warjiyo.

: The agreement aims to increase the use of local currencies in bilateral Indonesian-Japanese transactions and has been in effect since December 15, 2025.

The Executive Director of the BI Communication Department, Ramdan Denny Prakoso, said that this cooperation was designed to encourage bilateral transactions using each country's currency.

"Strengthening the Memorandum of Understanding/Memorandum of Cooperation (MOC) in Local Currency Transactions to encourage the use of local currency in bilateral transactions," he said in his statement, quoted Sunday, December 21.

: This Memorandum of Understanding also updates the previous cooperation regarding the establishment of a framework for the use of local currencies in the settlement of bilateral trade and direct investment, which was signed on December 5, 2019.

: In line with this development, the scope of cooperation has now been expanded, namely if previously it only covered current account transactions and direct investment, currently the cooperation covers all types of bilateral transactions in accordance with the provisions in force in each country.

"In line with this, this Memorandum of Understanding expands the scope of cooperation in settling bilateral local currency transactions from current account transactions and direct investment to all types of bilateral transactions, in accordance with the provisions in force in each country," he said.

"Through the strengthening of this Memorandum of Understanding, BI and JMOF are committed to increasing collaboration in encouraging the use of local currency for bilateral economic and financial transactions," he said.

"This step is expected to support the development of the financial market as well as strengthen the stability of the financial system in Indonesia and Japan," he added.

"This cooperation is also expected to strengthen mutually beneficial economic and financial relations between Indonesia and Japan," he said.