Jakarta, IndonesiaSentinel.com — Bank Indonesia (BI) and the Bank of Korea (BOK) in collaboration with South Korea’s Ministry of Finance, have finalized an agreement to conduct transactions using their respective local currencies.
This agreement, part of the Local Currency Transaction (LCT) framework, was formalized on Friday and will take effect on September 30, 2024. The deal enables trade between Indonesia and South Korea to be conducted in rupiah and won, rather than relying on foreign currencies like the U.S. dollar.
“This initiative follows the Memorandum of Understanding (MoU) signed in May 2023 and the operational framework agreement reached in June 2024,” BI said in a press release on Friday.
BI emphasized that the LCT framework aims to strengthen the interconnectedness of Appointed Cross Currency Dealer (ACCD) banks, facilitating cross-border transactions using local currencies. The collaboration will also promote direct quotation between the Indonesian rupiah (IDR) and the South Korean won (KRW) and implement regulatory relaxations to encourage the use of LCT.
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“Going forward, the implementation of the LCT framework is expected to enhance bilateral trade transactions, reduce foreign exchange risk exposure, and improve transaction efficiency.”
BI and BOK have designated the following banks as ACCD banks in Indonesia and South Korea, responsible for operationalizing the Rupiah-Won LCT framework:
ACCD Banks in Indonesia:
- Bank Mandiri (Persero) Tbk
- Bank Negara Indonesia (Persero) Tbk
- Bank Rakyat Indonesia (Persero) Tbk
- Bank Central Asia Tbk
- Bank CIMB Niaga Tbk
- Bank BTPN Tbk
- Bank Maybank Indonesia TbkBank OCBC NISP Tbk
- Bank DBS Indonesia
- Bank Woori Saudara Indonesia 1906 Tbk
- Bank KEB Hana Indonesia
- Bank Shinhan Indonesia
- Bank IBK Indonesia Tbk
- Bank KB Bukopin Tbk
ACCD Banks in South Korea:
- Woori Bank
- KEB Hana Bank Seoul
- Shinhan Bank Seoul
- Industrial Bank of Korea
- Kookmin Bank
- SMBC Seoul
- BNI Seoul Branch
(Ray)
