KUALA LUMPUR – Bank Negara Malaysia (BNM), Bank Indonesia (BI), and the Bank of Thailand (BoT) have announced a new set of rules to simplify local currency transactions between the three countries, benefiting businesses, investors, and financial institutions.
The expansion of eligible cross-border transactions under the framework includes more transaction types, such as portfolio investments.
In a joint statement, the central banks explained that the adoption of the harmonised Local Currency Transaction Framework Operational Guidelines (LCTF OG) enhances consistency, scalability and efficiency in facilitating local currency transactions across the three countries.
This update consolidates past agreements and allows for streamlined processes with greater transparency for participating financial institutions and their users.
The framework sets clear rules for all three countries while accommodating each nation’s local regulatory requirements. The guidelines now include portfolio investments, alongside trade in goods, services, and direct investments.
“Investors now have greater opportunities to conduct transactions in local currencies while mitigating exchange rate risks,” the statement added.
The central banks also welcomed more qualified commercial banks to support the expanded framework, noting their role in “facilitating local currency transactions, leveraging their expertise, operational strength, and cross-border networks.”
“Malaysia, Indonesia, and Thailand have witnessed an upward trend in local currency transactions for bilateral trades since the implementation of the LCTF,” the statement noted.
“This harmonised framework and operation will provide businesses with enhanced options for cross-border transactions. It also reaffirms the countries’ commitment to promoting the use of local currencies in regional trade and investment.” – February 17, 2025