Indonesia’s central bank, Bank Indonesia (BI), has formed a National Task Force aimed at expanding the use of local currency transactions (LCT) with partner nations. The move is part of Indonesia’s broader strategy to reduce reliance on the U.S. dollar in international trade and financial transactions. The task force was announced on the sidelines of this year’s ASEAN Summit held in Jakarta.
The initiative involves multiple government bodies, including the Coordinating Ministry for Economic Affairs, Ministry of Finance, Ministry of Foreign Affairs, and the Financial Services Authority (OJK), among others. This collaborative approach aims to streamline efforts and create a unified strategy for promoting the use of the Indonesian Rupiah and other local currencies in trade with partner countries.
Expanding partnerships and following BRICS’ lead
Indonesia has already implemented local currency transactions with several countries, including Malaysia, Thailand, Japan, and China. Furthermore, Singapore and South Korea have signed cooperation agreements to build a local currency transaction framework with Indonesia. The task force aims to consolidate these existing partnerships and explore new avenues for expanding the use of local currencies.
The formation of the task force comes on the heels of Indonesia ramping up its de-dollarization efforts earlier this year. Bank Indonesia Governor Perry Warjiyo stated that the country is following the lead of the BRICS nations—Brazil, Russia, India, China, and South Africa—in shifting away from the U.S. dollar. The BRICS countries recently concluded their summit in Johannesburg, where they agreed to encourage the use of national currencies in international transactions.
Indonesia is also a member of the Association of Southeast Asian Nations (ASEAN), which includes countries like Malaysia, Philippines, Singapore, and Vietnam. In May, ASEAN leaders agreed to promote the use of local currencies for economic and financial transactions, aligning with Indonesia’s de-dollarization objectives.
The formation of the National Task Force marks a significant step in Indonesia’s efforts to diversify its financial landscape and reduce dependency on the U.S. dollar. By collaborating with multiple government bodies and international partners, Indonesia aims to create a more resilient and diversified financial ecosystem. The move is seen as a strategic alignment with global trends, particularly the initiatives led by the BRICS nations, to encourage the use of local currencies in international trade and financial transactions.