Bank Negara and BoT expand currency settlement framework

KUALA LUMPUR: Bank Negara and the Bank of Thailand (BoT) have further expanded the ringgit-baht settlement framework effective Dec 1, 2021.

In a joint statement yesterday, the central banks said this was part of the continuous effort to facilitate wider use of local currencies for settlement of trade and direct investment between Malaysia and Thailand.

“The latest framework includes an expansion of eligible users to include Malaysians and Thais who reside in either country, as well as additional foreign exchange policy flexibilities such as simplified documentation requirements,” the statement said.

Bank Negara deputy governor Datuk Abdul Rasheed Ghaffour said the expansion would provide greater accessibility to ringgit- or baht-denominated financial services for individuals as well as businesses in both countries.

“The framework also now allows Thai individuals residing in Malaysia to avail themselves to these services.

“The expansion will boost future economic activities between the two countries,” he said.

Meanwhile, BoT deputy governor Mathee Supapongse said the latest expansion of the ringgit-baht settlement framework will benefit people and businesses in both countries.

“It will further facilitate cross-border financial transactions including through the recently launched cross-border quick-response payment linkage between the two countries.

“We believe this will pave the way for wider use of local currencies and greater financial integration within Asean,” he said.

The Local Currency Settlement Framework between Malaysia and Thailand was last expanded on Jan 2, 2018, after its initial launch on March 14, 2016, in accordance with the memorandum of understanding signed between Bank Negara and the BoT on Aug 27, 2015.

Following the latest expansion, Bank Negara and the BoT have also appointed additional qualified commercial banks in both countries to participate in and further support the expanded ringgit-baht settlement framework.

In general, the appointed banks are resilient and healthy, experienced in facilitating settlement of trade and direct investment between the two countries and have established strong business relationships with banks in the counter-party country.

The banks, which were additionally appointed, were HSBC Bank Malaysia Bhd and Standard Chartered Bank Malaysia Bhd. Existing appointed banks are Bangkok Bank Bhd, CIMB Bank Bhd, Malayan Banking Bhd, MUFG Bank (M) Bhd, Public Bank Bhd, RHB Bank Bhd and United Overseas Bank (M) Bhd.

In Thailand, the additional appointed banks are The Hong Kong and Shanghai Banking Corp Ltd, Bangkok Branch, and Standard Chartered Bank (Thai) PCL.

The existing appointed banks are Bangkok Bank PCL, Bank of Ayudhya PCL, CIMB Thai PCL, Kasikornbank PCL, Krung Thai Bank PCL, Siam Commercial Bank PCL and United Overseas Bank (Thai) PCL.

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