BI Prepares Strategic Steps to Increase Local Currency Transactions

Rupiah (photo: dock. Antara)

JAKARTA - Governor of Bank Indonesia (BI), Perry Warjiyo, emphasized the importance of encouraging the use of local currencies for cross-border transactions or known as Local Currency Transactions (LCT) as an effort to deepen financial markets, reduce exchange rate volatility, and create price efficiency.

This was conveyed at the 29th Executives Meeting of East Asia Pacific Central Banks (EMEAP). At the meeting, the central bank governors generally discussed various policies and initiatives that are in line with current economic developments and global policy challenges, inflation control, and capital flows.

The EMEAP Governors Meeting as a forum for exchanging views between central bank governors in the Asia Pacific region was held in Penang, Malaysia. This forum also followed up on the discussion of the 66th EMEAP Deputies' and Related Meetings in Bali, April 2024.

Perry said that the LCT initiative continues to show positive developments after its implementation, as seen from the increase in transaction volume and the number of business actors facilitated, as well as the formation of increasingly efficient prices.

In this regard, Perry explained three important efforts in improving the implementation of LCT, namely encouraging an adequate ecosystem with coverage of participants, products, prices, and infrastructure.

"strengthening the active role of authorities in encouraging the creation of an optimal LCT ecosystem and developing financial markets in local currencies and strengthening synergies between authorities both domestically and in partner countries," he explained in his statement, quoted on Wednesday, July 17.

Perry said that currently, BI has LCT cooperation with 8 (eight) countries, and 6 (six) of them are EMEAP member countries.

Furthermore, the governors exchanged views on the effectiveness of policy instruments to complement traditional macroeconomic policies and managing the impact of external uncertainty.

The Forum also supports the development of EMEAP initiatives in the areas of financial markets, banking supervision and resolution, payment systems and financial infrastructure, and information technology.