According to the latest CCTV news report, Indonesia Central Bank Governor Perry Wajiyo recently announced that Indonesia will launch a high-profile initiative with India and Saudi Arabia to use local currency settlements in cross-border ** and investments. This decision is a matter of widespread concern because it could have far-reaching implications for the economic landscape of Indonesia and the entire Southeast Asian region.
Speaking at a press conference in Jakarta, Wajiyo said: "We will continue to expand the use of the national currency. With the local currency settlement mechanism, the exchange rate of the rupiah can be more stable, as it will no longer depend on the US dollar**, and the macro stability of the Indonesian economy will continue to be strongly maintained. He also highlighted the positive impact of this initiative on the stability of the exchange rate in the Southeast Asia region.
Bank Indonesia's local currency settlement business showed significant growth last year, reaching US$5.9 billion in 2023, an increase of 552%。This shows that Indonesia is actively promoting the development of local currency settlement and reducing its dependence on major international currencies.
There is a clear motivation behind this decision. At the ASEAN** and Central Bank Governors' Meeting in March 2023, ASEAN member states agreed to strengthen the use of local currencies and reduce their dependence on major international currencies. This also reflects the growing urgency of countries such as Indonesia to get rid of the hegemony of the dollar.
Of particular note is the signing of memorandums of understanding between Bank Indonesia and Bank Malaysia and Bank of Thailand on local currency transactions to reduce dependence on the US dollar. Previously, Indonesia has already established local currency settlement cooperation with ASEAN member countries Thailand and Malaysia, and the newly signed agreement is an expansion of local currency settlement cooperation, which means that companies no longer need to rely on the US dollar as an intermediary in their ** and direct investment, and can directly use their respective national currencies.
However, the impact of this decision is not limited to the world of ** and investment. Indonesia, Malaysia and Thailand also plan to push for more efficient cross-border payments and intend to use local currencies for financial asset transactions, including bonds and bonds, Wajiyo said. This will provide new opportunities for financial market development and economic cooperation among the three countries.
According to the statistics department of Indonesia, the bilateral value between Indonesia and Malaysia reached US$27.9 billion in 2022, while the bilateral value between Indonesia and Thailand reached US$19.2 billion. These figures show that there is a strong flow of money between these countries, and that the promotion of local currency settlement will further facilitate the convenience and efficiency of these transactions.
Indonesia, officially known as the Republic of Indonesia, is an important country in the Southeast Asian region, with its capital in Jakarta. As of December 2022, Indonesia's population has reached 27.6 billion, ranking fourth in the world. On the economic front, Indonesia is one of the largest economies in ASEAN, with agriculture, industry, and services all playing an important role in the national economy.
In 2022, Indonesia's GDP reached 19,588IDR 4 trillion, which is about 1$29 trillion, an increase of 531%。This figure shows the strong performance of Indonesia's economy, as well as its economic position in the Southeast Asia region.
Bank Indonesia's decision to use local currency for settlement in cross-border** and investments is an important strategic move aimed at reducing dependence on the US dollar and enhancing the international status of the rupiah. This move will bring new opportunities for economic cooperation and financial market development in Indonesia and the entire Southeast Asian region, and will also lead to more discussion about the future monetary landscape.
We look forward to seeing how this initiative will drive economic growth in Southeast Asia and the evolution of the international monetary system. What are your thoughts on this news? Welcome to leave a message to share.