Collaborating With 9 Ministries And Institutions, BI Increases Local Currency Use

Photo: Bank Indonesia (BI)

JAKARTA - Bank Indonesia (BI) and 9 Ministries/Institutions (K/L) who are members of the LCT National Task Force strengthen their commitment to increasing the use of local currencies in economic and financial transactions with partner countries.

This is realized through the signing of a Cooperation Agreement (PKS) and Coordination in the Context of Implementing Duties and Functions of the National Task Force for Local Currency Transactions to encourage the implementation of local currency use (Local Currency Transaction /LCT) in bilateral transactions which is one of the Government's programs in strengthening the national economy.

In addition, this PKS is a follow-up to the Memorandum of Understanding (NK) which was previously agreed on September 5, 2023.

Senior Deputy Governor of Bank Indonesia Destry Damayanti said that this agreement is a concrete step to carry out commitment, cooperation, and policy synergy in accelerating the implementation of LCT, as well as to guide the implementation of cooperation and coordination of the LCT National Task Force and all parties in encouraging an increase in LCT realization, with the support of the synergy of work programs between members of the LCT National Task Force.

"This step is expected to support currency diversification efforts in bilateral transactions as a form of risk mitigation amid high global uncertainty, as well as efforts to deepen financial markets and stabilize exchange rates," he explained in his statement, Friday, August 30.

In addition, Destry conveyed that efforts to expand the implementation of LCT also continue to be carried out with partner countries.

Currently, the implementation of LCT cooperation between Indonesia has been carried out with Malaysia, Thailand, Japan and China.

To note since the beginning of the implementation in 2018, the total LCT transactions in the first semester of 2024 reached 4.7 billion US dollars or is predicted to increase 1.5 times from the total 2023 LCT transactions of 6.29 billion US dollars.

In the future, Destry said that the implementation of LCT is expected to continue to increase, both with 4 existing countries, as well as with 4 new partner countries, namely Singapore, South Korea, India, and the United Arab Emirates.

Destry said the collaboration and policy synergy between members of the LCT National Task Force continues to be carried out to encourage an increase in LCT realization.

"This is realized by formulating policy recommendations that are expected to encourage business actors to further increase the use of local currencies in trade transactions and direct investment," he said.

In addition, Destry said, coordination of policies and implementation of provisions was also carried out in banking areas and the financial sector, as well as policies that support the expansion of the use of LCT in inter-state payment transactions.

In line with that, the Deputy for Macroeconomic and Financial Coordination of the Coordinating Ministry for Economic Affairs, Ferry Irawan, welcomed the LCT implementation initiative in cross-border economic and financial transactions.

This has shown very positive results, as reflected in rapidly increasing transactions both in terms of transaction value and number of users.

Ferry conveyed that the implementation of LCT with Indonesia's increasingly developing strategic partners will provide tangible benefits for the national economy.

"With the same spirit, other K/Ls also support the acceleration of the implementation of LCT through their respective strategic programs," he said.