The central banks of Indonesia, Malaysia and Thailand have launched a local currency settling framework designed to boost and facilitate trade.
The arrangement will see the promotion of international trade settlements in rupiah, ringgit and baht, with the introduction of flexibility around foreign exchange facilities between the three nations.
The aim is to make it easier for companies to trade and access local currency to finance the trade. A common complaint among traders and bankers operating in the region is that the divergence in currencies makes it expensive and complex to settle transactions.
A stated aim of the Asean group of nations is to further integrate Southeast Asian economies. With this arrangement, three of its largest members are looking to take the first step in harmonising currency regulations.
It will enable entities in each of the countries to obtain a range of financial services in the corresponding currencies of counterparts in the other nations, such as deposits and foreign exchange hedging.
Bank Indonesia, Bank Negara Malaysia and Bank of Thailand have appointed a raft of commercial banks to conduct these services, which is outlined in three separate frameworks, effective from January 2, 2018.
The following banks are involved in the initiative:
Indonesia: Bank Rakyat Indonesia, Bank Mandiri, Bank Central Asia, Bank Negara Indonesia, CIMB Niaga, Maybank Indonesia.
Malaysia: BTMU Malaysia, CIMB Bank, Hong Leong Bank, Malayan Banking, Public Bank, RHB Bank, UOB Berhad.
Thailand: Bangkok Bank, Bank of Ayudhya, Kasikombank, Krungthai Bank, Siam Commercial Bank, UOB Thailand.