KUALA LUMPUR: Bank Negara Malaysia (BNM), Bank Indonesia (BI), the Bank of Thailand (BOT), and Bangko Sentral ng Pilipinas (BSP) today signed a memorandum of understanding (MoU) on cooperation under the Local Currency Transaction (LCT) Framework.
In a statement today, BNM said 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 new MoU 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,” BNM said.
It said the participating central banks would 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,” it added. - Bernama
