Jakarta: Bank Negara Malaysia and Bank Indonesia (BI) today announced the expansion of the ringgit-rupiah settlement framework.
The framework was first launched in December 2017 in accordance with the Memorandum of Understanding between the central banks that was signed in December 2016.
"This expansion, which will be effective from today, 2 August 2021, is part of the continuous effort to facilitate wider use of local currencies for settlement of trade and direct investment between Malaysia and Indonesia," stated the central banks in a joint press release on Monday.
The expanded framework now includes direct investment, income and transfer, in addition to trade, as eligible underlying transactions.
It also includes expansion of eligible users of the framework, such as individuals, and additional foreign exchange policy flexibilities, such as more simple documentation requirement, to facilitate the operationalisation of the framework.
Given the expansion, the central banks have also appointed additional qualified commercial banks in both countries to support the operationalisation of the expanded ringgit-rupiah settlement framework.
In general, the appointed banks are experienced in facilitating trade and direct investment between the two countries, have a wide customer base and have established strong business relationships with banks in the counterparty country.
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