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Bank Indonesia, Bank of Korea Agree on Local Currency Transaction Framework

Translator

Dewi Elvia Muthiariny

Editor

Mahinda Arkyasa

30 August 2024 22:51 WIB

TEMPO.CO, Jakarta - Bank Indonesia (BI), Bank of Korea (BOK), and the Korean Finance Ministry have formalized a Local Currency Transaction (LCT) cooperation framework, aiming to promote the use of local currencies, Rupiah and Won, in trade transactions between Indonesia and South Korea.

“The implementation of this LCT framework marks a significant milestone in our bilateral financial cooperation,” said Erwin Haryono, Head of BI's Communication Department, during a press conference in Jakarta on August 30, 2024.

Following a Memorandum of Understanding signed in May 2023 and an operational framework agreement in June 2024, the Indonesia-South Korea LCT framework will become effective on September 30, 2024.

Under this framework, Designated Cross Currency Dealer (ACCD) banks in both countries will be empowered to facilitate current transactions using local currencies. This LCT mechanism aims to streamline cross-border settlements and reduce dependency on third-party currencies.

Erwin explained that to further encourage the use of LCTs, BI and BOK have agreed to promote direct exchange rate quotations between the Rupiah and Won and relax regulatory requirements.

The implementation of the LCT framework is expected to boost bilateral trade, mitigate exchange rate risks, and enhance transaction efficiency.

ACCD banks in Indonesia include PT Bank Mandiri, PT Bank Negara Indonesia, PT Bank Rakyat Indonesia, PT Bank Central Asia, PT Bank CIMB Niaga, PT Bank BTPN, PT Bank Maybank Indonesia, PT Bank OCBC NISP, PT Bank DBS Indonesia, PT Bank Woori Saudara Indonesia 1906, PT Bank KEB Hana Indonesia, PT Bank Shinhan Indonesia, PT Bank IBK Indonesia, and PT Bank KB Bukopin.

Meanwhile, the South Korean ACCD banks include Woori Bank, KEB Hana Bank Seoul, Shinhan Bank Seoul, Industrial Bank of Korea, Kookmin Bank, SMBC Seoul, and BNI Seoul Branch.

GRACE GANDHI | ANTARA

Editor's Choice: Indonesia Eyes Export Growth with South Korea via IK-CEPA

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Bank IndonesiaBank of KoreaSouth KoreaRupiahWon


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