Jakarta (Indonesia Window) – Governor of Bank Indonesia Perry Warjiyo and his counterpart of People’s Bank of China Yi Gang have agreed to establish cooperation on Local Currency Settlement (LCS), according to Bank Indonesia’s statement.

The agreement was confirmed in a memorandum of understanding signed on Wednesday (Sep 30), Bank Indonesia (BI) said the statement received by Indonesia Window here on Wednesday.

BI further said People’s Bank of China and Bank Indonesia agreed to encourage the use of local currencies in the settlement of direct trades and investments.

The agreement includes the use of direct quotation of exchange rates and inter-bank trading for Yuan and Rupiah, BI said.

The cooperation would also be strengthened by information sharing and periodic discussions between Indonesian and Chinese authorities.

According to BI, the collaboration between Bank Indonesia and People’s Bank of China is important in an effort to enhance the bilateral financial cooperation between China and Indonesia.

The two countries’ authorities considered that the collaboration would give positive contributions to the use of local currencies in the settlement of direct trade and investment between China and Indonesia.

BI further said the measure was expected to extend the existing LCS cooperation between Bank Indonesia and Bank of Thailand, Bank Negara Malaysia (the Central Bank of Malaysia), and Japan’s Ministry of Finance.

Reporting by Indonesia Window