LCS Task Force Officially Formed, BI Expands The Use Of Rupiah In International Trade

Illustration (Photo: Doc. Antara)

JAKARTA – Bank Indonesia (BI) together with ministries/agencies and associations have initiated the formation of the National Local Currency Settlement (LCS) Task Force. The establishment of the LCS is to further reduce dependence on the use of the main currency of the dollar in foreign trade transactions.

Head of the BI Communications Department Erwin Haryono said the LCS system allows Indonesia to use the rupiah currency in international transactions as well as being useful for creating stability in the rupiah exchange rate.

"LCS is also beneficial for the business world in providing natural hedges to protect against exchange rate exposure, creating cheaper and more efficient transaction costs through direct rates, as well as faster fund transfers," he said in a press statement quoted on Saturday, May 28.

Erwin explained, the development of LCS transactions has been implemented since 2018 and now includes several countries to cooperate, namely Malaysia, Thailand, Japan, and China.

"The contribution of these four countries has driven a positive trend of LCS growth in the financial market, reaching 868 million US dollars in the first quarter of 2022," he said.

Meanwhile, the LCS National Task Force program series consists of three things. First, targeted socialization to increase awareness and understanding for business actors. Second, carry out regulatory reforms by creating accommodative rules.

And the third is to encourage breakthroughs in the form of incentives, facilitation, and acceleration of services that support LCS.

"The LCS National Task Force is ready to develop, accelerate and expand the use of Local Currency Settlement to support financial system stability and accelerate national economic recovery," Erwin concluded.