Use of the local currency settlement (LCS) scheme between Indonesia and Thailand has grown substantially since its inception in late 2017, Bank Indonesia (BI) said in a statement on Monday.
The LCS scheme promotes the use of local currencies to settle transactions between related parties to boost international trade and investment between countries and reduce reliance on third-party currencies like the US dollar.
Trade transactions between Indonesia and Thailand using the LCS scheme had grown substantially since the scheme was introduced on Dec. 11, 2017. In the first two months of this year, transactions worth Rp 121 billion (US$8.5 million) were settled using local currencies, an increase from Rp 30 billion worth of LCS transactions recorded over the same period last year.
The figure was also above the Rp 58 billion monthly average LCS transactions recorded last year, the BI data revealed. Total trade between the two countries amounted to $17.71 billion in 2018, according to data from the Trade Ministry.
“The development [and] implementation of the LCS [scheme] was one of the topics discussed in a bilateral meeting between BI Governor Perry Warjiyo and Bank of Thailand Governor Veerathai Santiprabhob,” BI spokesman Onny Widjanarko said in a statement on Monday.
He added that the bilateral meeting between the two central bank governors was routinely held to exchange views and experiences on strengthening their respective capacity in facing future challenges.
In addition, the central bank governors also stressed the importance of optimizing developments in the digital economy to boost gross domestic product (GDP) growth in the two countries, said Onny.
Onny added Perry had told his counterpart that cooperation between the two financial authorities on the bilateral, regional and multilateral level was one of the key solutions to facing more complex challenges amid a high degree of uncertainty in the global economy. (bbn)