AlwaysFree: Indonesia’s Central Bank - Signing of the MoU Between Bank Indonesia and Bank of Korea on the Cooperation to Promote the Use of Local Currencies for Bilateral Transactions

According to Indonesia’s Central Bank press release on May 2, 2023, Bank Indonesia and Bank of Korea signed the Memorandum of Understanding (MoU) on a Framework for Cooperation to Promote Bilateral Transactions in Local Currencies. The MoU was signed by the Governor of Bank Indonesia, Perry Warjiyo and the Governor of Bank of Korea, RHEE, Chang Yong, on the sidelines of the ASEAN+3 Finance Ministers and Central Bank Governors Meeting in Incheon, South Korea.

Bank Indonesia and Bank of Korea reached mutual agreement on initiatives relating to promote the use of local currencies in bilateral transactions, such as current account transactions, direct investment, and any other economic and financial transactions as agreed upon by both authorities. This collaboration marks a key milestone in strengthening bilateral financial cooperation between Bank Indonesia and Bank of Korea. The cooperation can help business reduce their transaction costs and exposure to exchange rate risks of conducting bilateral transactions, among others, by enabling the direct exchange rate quotation between the Korean Won and the Indonesian Rupiah in interbank trading. This cooperation will be enhanced through information sharing and periodical discussions between Korean and Indonesian authorities.

The authorities believe that more extensive use of local currencies in bilateral transactions will ultimately contribute to promoting trade between Indonesia and Korea as well as financial market deepening in local currencies in the two countries.

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