DIGIVESTASI - Bank Indonesia (BI) and the Bank of Korea (BOK) agreed to encourage the use of local currencies in financial and economic transactions (LCT) starting in 2024.

The agreement was signed on the sidelines of the BI-BOK High Level event. See you again yesterday Sunday (October 12). The agreement follows the signing of a Memorandum of Understanding (MoU) on cooperation in the use of local currency between the two central banks agreed in May 2023. 

BI, in a statement in Jakarta, said that as a first step in implementing the agreement, BI and BOK agreed to develop the LCT framework into operational guidelines.

The LCT framework will then facilitate the settlement of cross-border payment transactions in the trade sector. Through such support, BI hopes to reduce foreign exchange risks and costs for trade participants and other users. 

Because through this agreement, Indonesian and Korean banks can directly quote exchange rates. On the occasion, Bank Indonesia Governor Perry Warjiyo was proud to finally reach the agreement and initiative with BOK.

"Through the implementation of this LCT cooperation framework, trade between countries can use direct exchange rates provided by ACCD (Designated Cross Currency Dealers) banks, thus providing options for businesses to conduct commercial transactions and increasing the efficiency of currency transactions, which will enhance macro economic stability.

"This cooperation will strengthen bilateral financial cooperation between Korea and Indonesia," he said.

Similarly, Bank of Korea Governor RHEE is very satisfied with this cooperation. In addition, South Korea views Indonesia, with its vast territory and population, playing an important role in the global supply chain for advanced sectors such as batteries and electric vehicles that are of interest to South Korea. 

In addition, he added, Korean companies' interest in Indonesia also continues to increase. 

"In this context, the implementation of the LCT framework that encourages the use of local currencies in bilateral trade transactions is expected to have a positive impact on economic development through increased strengthening of bilateral trade and the use of local currencies of both countries. He said