Bank Indonesia and the Central Bank of Singapore Extend Financial Cooperation, Can Exchange Money Up to IDR 100 Trillion

Illustration (Photo: Doc. Antara)

JAKARTA - The Bank Indonesia Monetary Authority of Singapore (MAS) is said to have reached an agreement regarding the extension of the bilateral financial cooperation agreement which is valid until November 3, 2023.

Bank Indonesia (BI) Director of Communications Department, Nita A. Muelgini, said the collaboration between the two central banks had been going on since November 2018 as a follow-up to the agreement between the President of the Republic of Indonesia Joko Widodo and Singapore's Prime Minister Lee Hsien Loong.

"This is intended to continue to strengthen cooperation to maintain monetary and financial stability in the region, including in the two countries", she said in a written statement on Friday, November 4.

Nita explained that there were two main points of the agreement that were mutually agreed upon. First, the Local Currency Bilateral Swap Agreement (LCBSA), allows the exchange of local currencies between the two central banks of up to 9.5 billion Singapore dollars or IDR 100 trillion.

Two is the Bilateral Repo Line (BRL), which allows repo transactions between the two central banks to obtain liquidity in US dollars of up to US$ 3 billion.

"This scheme is pursued by guaranteeing government bonds issued by G3 countries (United States, Japan, and Germany) owned by the two central banks", she said.

Nita added that this cooperation has been extended every year with the last one in November 2021. She said, this fourth extension agreement further demonstrates the commitment of BI and MAS to continue to support each other to build confidence in the economic conditions in each country.

"The spirit of cooperation between the two countries is also in line with the spirit of the theme of the Indonesian Presidency at the G20 2022 and is believed to be an important asset for Indonesia's chairmanship in ASEAN in 2023", she said.

For information, LCBSA is a form of bilateral financial cooperation that is commonly carried out by central banks. This agreement allows a central bank to obtain foreign currency from partner central banks by exchanging the local currency of each country, to be exchanged back at the agreed maturity date.

Meanwhile, BRL is also a form of bilateral financial cooperation commonly carried out by the central bank. This agreement allows a central bank to obtain liquidity in US dollars from partner central banks using pledging its securities, to be exchanged back at the agreed maturity date.