KUALA LUMPUR, Dec. 11 (Xinhua) -- The central banks of Malaysia, Indonesia and Thailand launched a local currency settlement framework on Monday as they seek to further promote trade and investment in each other.
The three central banks said in a joint statement that they had launched the local currency settlement framework between Bank Negara Malaysia (BNM) and Bank Indonesia (BI), and between Bank of Thailand (BOT) and BI.
These initiatives are part of the efforts to promote a wider use of local currencies to facilitate and boost trade and investment in these countries, it said.
The establishment of these frameworks marks a key milestone in strengthening regional financial cooperation between BI, BNM and BOT, it added.
In addition to the local currency settlement framework between BI, BOT and BNM, the baht-ringgit settlement framework that between BNM and BOT also expanded to include direct investment to enrich the existing trade transactions.
All three frameworks, including rupiah-ringgit framework, rupiah-baht framework and expanded baht-ringgit framework, will be effective from Jan. 2, 2018.
Malaysian Central Bank Governor Muhammad Ibrahim said Monday that Indonesia and Thailand are important partners to Malaysia both in trade and direct investments. He hopes to see the growth in the use of the three countries currencies for cross-border settlement of trade.
In 2016, Malaysia shared a bilateral trade volume of 13.8 billion U.S. dollars with Indonesia and 13 billion U.S. dollars with Thailand. However, only 5.8 percent and 11.4 percent of Malaysia's trade with Indonesia and Thailand respectively were settled in local currencies, according to the governor.
"This is an enormous business opportunity for the financial sector, which has yet to be realized," he added.
He also noted Maybank, CIMB, RHB, Public Bank, Hong Leong Bank, Bangkok Bank, United Overseas Bank and Bank of Tokyo-Mitsubishi have been appointed as the eligible banks for the settlement. Enditem
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