The Bank of Korea Signs MOU with Indonesia to Promote Direct KRW-Rupiah Currency Transactions

Lee Chang-yong "Indonesia Important for Korea's Global Supply Chain Diversification"

Lee Chang-yong, Governor of the Bank of Korea, is attending the 23rd Korea-China-Japan Finance Ministers and Central Bank Governors Meeting held on the 2nd in Songdo, Incheon, discussing cooperation measures among the three countries. (Photo by Bank of Korea)

Lee Chang-yong, Governor of the Bank of Korea, and Perry Warjiyo, Governor of the Bank of Indonesia, signed a Memorandum of Understanding (MOU) on the 2nd to promote direct transactions between the Korean won and the Indonesian rupiah between South Korea and Indonesia.

Accordingly, conditions have been established for private banks to settle payments through direct won-rupiah transactions in current account and direct investment transactions between the two countries.

Direct won-rupiah transactions differ from the currency swap-linked trade settlement support system, in which central banks participate as the main providers of funds, in that private banks are responsible for supplying settlement funds in their own currencies.

Governor Warjiyo stated on the day, "Swaps between central banks are done in times of crisis," adding, "Since the foreign exchange markets of both countries are currently in good condition, there is no need for a national swap, and this MOU is meaningful in reducing costs for private companies during normal times."

The Bank of Korea said, "The signing of the MOU will be an important milestone in strengthening financial cooperation between the two countries," and added, "It is expected to ultimately promote trade between the two countries by reducing transaction costs for companies and mitigating exchange rate risks through the use of local currencies in the future."

Governor Lee explained, "Indonesia is an important investment destination for us," and said, "Going forward, our country needs to diversify global supply chains, and Indonesia can play an important role."

This content was produced with the assistance of AI translation services.