Indonesia and China's local currency settlement mechanism officially launched

        The Bank of Indonesia (hereinafter referred to as the “Bank Indonesia”) announced on September 6 that according to the memorandum of understanding signed between the bank and the People’s Bank of China on September 30, 2020, the two parties will officially initiate settlement in local currency between Indonesia and China from September 6, 2021. Mechanism (hereinafter referred to as "LCS"). This move is an important milestone in the deepening of monetary and financial cooperation between the central banks of the two countries. It will help to form a direct quotation between the Indonesian rupiah and the renminbi, expand the use of local currency in the economic and trade exchanges between the two countries, and promote trade and investment facilitation.

        According to reports, from September 6, 2021, commercial banks such as Industrial and Commercial Bank of China and Bank of Central Asia of Indonesia, as franchised cross-currency market makers (ACCD), can handle RMB/Indonesia under the framework of Sino-Indonesia local currency settlement cooperation in accordance with relevant regulations. Rupee-related transactions.

　　 Bank of China Hong Kong Jakarta Branch and Bank of China have been selected as franchised cross-currency market makers to carry out settlement of current account and cross-border investments in RMB and Indonesian rupiah, and conduct direct quotation transactions between RMB and Indonesian rupiah.

　　 The Indonesian central bank executives stated that the bilateral local currency settlement mechanism will enhance the stability of the Indonesian rupiah by reducing the domestic foreign exchange market’s reliance on the US dollar and other foreign currencies. Currently, about 10% of Indonesia's international trade uses RMB.