Malaysia, Indonesia, Thailand boost local currency transaction framework
Bank Negara Malaysia, Bank Indonesia (BI) and the Bank of Thailand (BOT) have announced the adoption of a harmonised Local Currency Transaction Framework Operational Guidelines (LCTF OG) and the expansion of eligible cross-border transactions under the framework.
“The harmonised LCTF OG enhances consistency, scalability and efficiency in facilitating local currency transactions across the three countries. It consolidates bilateral guidelines previously established between the countries and allows for streamlined processes with greater transparency for participating financial institutions and their users.
“The harmonised LCTF OG sets out operating parameters that apply to all participating countries while accommodating specific local regulatory requirements of each jurisdiction,” said Bank Negara in a statement.
It added that the latest framework also includes portfolio investments as eligible underlying transactions, in addition to trade in goods and services and direct investments.
Investors now have greater opportunities to conduct transactions in local currencies while mitigating exchange rate risks, said the central bank.
“Following this latest expansion, Bank Negara, BI and BOT welcome additional qualified commercial banks to participate in and support the expanded LCTF.
“These banks will play a vital role in facilitating local currency transactions, leveraging their expertise, operational strength and cross-border networks.”
Bank Negara said Malaysia, Indonesia and Thailand have witnessed an upward trend in local currency transactions for bilateral trades since the implementation of the LCTF.
“This harmonised framework and operation will provide businesses with enhanced options for cross-border transactions. It also reaffirms the countries’ commitment to promote the use of local currencies in regional trade and investment.
The Star
Asia News Network
