APD | Regional cooperation to boost local currency settlement signed

By APD writer Melo M. Acuña

MANILA, April 5 (APD) – The Bank of Indonesia, Bank of Negara Malaysia, Bank of Thailand and the Bangko Sentral ng Pilipinas signed three separate pairs of bilateral Letters of Intent (LOIs) on local currency settlement framework.

In a statement released from Chiang Rai in Thailand Friday, it was learned Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno signed a Letter of Intent with Governor Perry Warjiyo of the Bankof Indonesia. He also signed another Letter of Intent with Governor Nor Shamsiah Yunus of the Bank Negara of Malaysia and with Governor Veerathai Santiprabhob of the Bank of Thailand.

The three Letters of Intent represent concrete efforts of the four central banks in promoting their mutual interests by the potential establishment of local currency settlement frameworks among them.

According to the statement, the Bank of Indonesia and the Bank of Thailand have agreed to start exploring the possibility of expanding the scope of their existing local currency framework.

The greater use of local currencies in settlement of trade and other areas is aimed at significantly reducing transaction costs and foreign exchange risks particularly amidst the current volatility faced by currencies in far advanced economies.

“The wider use of local currencies in the ASEAN Economic Community enhances economic and financial integration, as well as spurs further development of the foreign exchange and financial markets within the region,” according to the statement.

The statement concluded by saying the progress towards greater financial integration in the region is definitely a welcome development as the region witnesses the expansion of similar arrangements that were launched in 2017 which include the Memoranda of Understanding (MoUs) signed between Bank of Indonesia and Bank Negara Malaysia and between Bank of Indonesia and Bank of Thailand.

(Top image: Governor Perry Warjiyo of Bank of Indonesia (extreme left), Governor Veerathai Santiprabhob of Bank of Thailand (second from left), Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno (second from right) and Assistant Governor Marzunisham Omar of the Bank Negara Malaysia (extreme right) show the Letters of Intent they signed in Chiang Rai, Thailand April 5, 2019.)

(ASIA PACIFIC DAILY)