Holiday Ayo - Bank Indonesia (BI) continues to strengthen the use of local currency or Local Currency Transaction (LCT). 

This time, the BI Bank of Korea (BOK) and the Korean Ministry of Finance agreed on a Local Currency Transaction (LCT) cooperation framework to encourage the use of local currencies Rupiah and Won for trade transactions between Indonesia and South Korea. 

“Implementation of the LCT framework between Indonesia and South Korea is an important achievement in bilateral financial cooperation between the two countries," said Head of the BI Communications Department Erwin Haryono, as reported by Antara, Friday (30/8). 

This step is a follow-up to the memorandum of understanding (MoU) signed in May 2023 and the operational framework agreement in June 2024. 

The Indonesia-South Korea LCT framework will be implemented effectively starting September 30 2024, The LCT framework will strengthen the interconnection of Appointed Cross Currency Dealer (ACCD) banks in facilitating current transactions between countries using local currencies. 

LCT is the use of local currency in settling transactions between countries. Erwin said that this collaboration also encouraged direct exchange rate quotations (direct quotation) between the Indonesian Rupiah (IDR) and the South Korean Won (KRW) as well as relaxing the provisions needed to encourage the use of LCT. 

In the future, implementation of the LCT framework will encourage increased bilateral trade transactions, reduce exchange rate risk exposure, and increase transaction efficiency. 

BI and BOK designated a number of banks as ACCD banks in Indonesia and South Korea which will facilitate the operationalization of the Rupiah-Won LCT framework. 

The Indonesian ACCD banks are PT Bank Mandiri (Persero) Tbk, PT Bank Negara Indonesia (Persero) Tbk, PT Bank Rakyat Indonesia (Persero) Tbk, PT Bank Central Asia Tbk, PT Bank CIMB Niaga Tbk, PT Bank BTPN Tbk, PT Bank Maybank Indonesia Tbk, PT Bank OCBC NISP Tbk. Then, there are PT Bank DBS Indonesia, PT Bank Woori Saudara Indonesia 1906 Tbk, PT Bank KEB Hana Indonesia, PT Bank Shinhan Indonesia, PT Bank IBK Indonesia Tbk, and PT Bank KB Bukopin Tbk. 

Meanwhile, South Korean ACCD banks include Woori Bank, KEB Hana Bank Seoul, Shinhan Bank Seoul, Industrial Bank of Korea, Kookmin Bank, SMBC Seoul, and BNI Seoul Branch.