Bank Negara Malaysia (BNM), Bank Indonesia (BI), Bank of Thailand (BOT), and Bangko Sentral ng Pilipinas (BSP) have signed a memorandum of understanding (MoU) on cooperation under the Local Currency Transaction (LCT) Framework on Friday.
The new MoU establishes a framework for cooperation among the four central banks to promote and facilitate the use of local currencies in the settlement of bilateral transactions between the participating jurisdictions, including trade, investment, and other eligible transactions, the central banks said in a statement.
It supersedes the previous bilateral MoUs on Framework for Cooperation to Promote Bilateral Transactions in Local Currencies concluded among BNM, BI, and BOT in August 2023.
By encouraging the wider use of local currencies in regional transactions, the framework aims to enhance efficiency in cross-border settlements, reduce costs associated with multiple currency conversions, and provide businesses and other market participants with greater flexibility in managing foreign exchange risks.
The participating central banks will continue to collaborate in advancing the development and implementation of the LCT Framework. The initiative is expected to gradually expand local currency transactions to support economic activities and strengthen regional financial cooperation and economic resilience.
The MoU was signed by BNM Governor Abdul Rasheed Ghaffour, BI Governor Destry Damayanti, BOT Governor Vitai Ratanakorn, and BSP Governor Eli M. Remolona, Jr.