Asean banks seek wider use of local currencies
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Fri, 05 Apr 2019 16:41:57 +0000
Four central banks in the Association of Southeast Asian Nations (Asean) have taken the initial step in setting up a local currency settlement framework.
In a joint statement, the Bangko Sentral ng Pilipinas (BSP), Bank Indonesia, Bank Negara Malaysia and Bank of Thailand said they signed three pairs of bilateral letters of intent (LOIs) for the framework.
“The three LOIs represent the concrete efforts of the four central banks in promoting their mutual interests by the potential establishment of local currency settlement frameworks among them,” they stressed.
The monetary authorities added that Bank Indonesia and Bank of Thailand had also agreed to start exploring the possibility of expanding the scope of their existing local currency settlement framework.
“The greater use of local currencies in settlement of trade and other areas is aimed at reducing the transaction costs and foreign exchange risks particularly amidst the current volatility faced by currencies in advanced economies,” they said.
The central banks further said that wider use of local currencies in the Asean Economic Community would enhance economic and financial integration as well as spur further development of foreign exchange and financial markets in the region.
Lastly, they view the LOI signing as a welcome development toward greater financial integration in the region following the expansion of similar arrangements launched in 2017, namely the memoranda of understanding concluded between Bank Indonesia and Bank Negara Malaysia, and between Bank Indonesia and Bank of Thailand.
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