BNM: Asean initiatives at 'new pinnacle' with local currency settlement

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KUALA LUMPUR (Dec 11): Bank Negara Malaysia (BNM) governor Tan Sri Muhammad Ibrahim said the Association of Southeast Asian Nations (Asean) has reached a "new pinnacle" of regional initiatives where cross-border settlements using local currencies to settle trade and direct investments have taken shape.

Muhammad said this in Jakarta, Indonesia, today during the launch of two local currency trade settlement frameworks, one of which was between BNM and Bank Indonesia, and the other was between Bank Indonesia and Bank of Thailand.

"It is an opportunity to mitigate the impact of volatilities in major trading currencies on regional trade and investment activities. We can recall the Global Financial Crisis, where the tightening of global US dollar liquidity was a contributor to the 19% contraction of total trade and 11.5% contraction of total inward FDI (foreign direct investment) into the region.

"The implementation of these frameworks will complement our existing close partnership and cooperation as neighbours, with common objectives and shared aspirations. On this note, I look forward to witness the growth in the use Indonesian rupiah, Thai baht and Malaysian ringgit for cross-border settlement of trade between Indonesia and Malaysia, and Thailand and Malaysia, respectively," Muhammad said.

According to BNM, Bank Indonesia and Bank of Thailand's joint statement today, BNM and Bank Indonesia have appointed the following banks to support the operationalisation of the rupiah-ringgit framework:

Malaysia:

  • CIMB Bank Bhd
  • Hong Leong Bank Bhd
  • Malayan Banking Bhd
  • Public Bank Bhd
  • RHB Bank Bhd

Indonesia:

  • PT. Bank Rakyat Indonesia (Persero), Tbk
  • PT. Bank Mandiri (Persero), Tbk
  • PT. Bank Central Asia, Tbk
  • PT. Bank Negara Indonesia (Persero), Tbk
  • PT. Bank CIMB Niaga, Tbk
  • PT. Bank Maybank Indonesia,Tbk

According to the statement today, BNM and Bank of Thailand have appointed the following banks to support the ringgit-baht framework which was launched in March 2016.

Malaysia:

  • CIMB Bank Bhd
  • Malayan Banking Bhd
  • Public Bank Bhd
  • RHB Bank Bhd
  • Bangkok Bank Bhd
  • Bank of Tokyo-Mitsubishi UFJ Malaysia Bhd
  • United Overseas Bank Bhd

Thailand:

  • Bangkok Bank PCL
  • Bank of Ayudhya PCL
  • CIMB Thai PCL
  • Kasikornbank PCL
  • Krung Thai Bank PCL
  • Siam Commercial Bank PCL
  • United Overseas Bank (Thai) PCL

"All three frameworks, i.e. rupiah-ringgit framework; rupiah-baht framework; and expanded baht-ringgit framework, will be effective from Jan 2, 2018," the statement indicated.