Indonesia’s central bank has established a national task force to expand the use of local currency with partner countries. Malaysia, Thailand, Japan, and China are already trading with Indonesia using local currencies. In addition, Singapore and South Korea have signed cooperation agreements to build a local currency transaction framework with Indonesia, according to the central bank.
Indonesia’s De-Dollarization Efforts
Bank Indonesia (BI), the Indonesian central bank, announced on Tuesday that it has “formed a National Task Force to expand the use of local currency transactions (LCT) in Indonesia with partner countries.” The Memorandum of Understanding (MoU) concerning the National LCT Task Force was signed on the sidelines of this year’s ASEAN Summit in Jakarta on Tuesday.
Besides the central bank, the Coordinating Ministry for Economic Affairs, Coordinating Ministry for Maritime Affairs and Investment, Ministry of Finance, Ministry of Foreign Affairs, Ministry of Industry, Ministry of Trade, Ministry of State-Owned Enterprises, Financial Services Authority (OJK), and Indonesia Deposit Insurance Corporation (IDIC) also participate in the LCT project.
The announcement details:
Currently, LCT Corporation has been implemented between Indonesia and several neighboring countries, namely Malaysia, Thailand, Japan, and China. Meanwhile, Singapore and South Korea have also signed cooperation agreements to build an LCT implementation framework with Indonesia.
Indonesia recently ramped up its de-dollarization efforts. In April, Bank Indonesia Governor Perry Warjiyo stated that Indonesia is following the lead of the BRICS economic bloc (Brazil, Russia, India, China, and South Africa) to shift away from using the USD in international trade and financial transactions.
The BRICS nations recently wrapped up their summit in Johannesburg. The economic group invited six countries to join as new members. At the conclusion of the summit, the BRICS leaders agreed to encourage the use of national currencies in international trade and financial transactions.
Indonesia is a member of the Association of Southeast Asian Nations (ASEAN), along with Brunei, Cambodia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. In May, the leaders of the ASEAN nations agreed to push the use of local currencies for economic and financial transactions.
What do you think about Indonesia’s de-dollarization efforts to set up a national task force to focus on the use of local currencies instead of the U.S. dollar? Let us know in the comments section below.