VOI - Voice of Indonesia | RRI - Radio Republik Indonesia

Illustration - The logo of Bank Indonesia. (ANTARA/HO-BI Documentation/KT) - 

Bank Indonesia (BI) and China's central bank, the People's Bank of China (POBC), renewed the Bilateral Currency Swap Arrangement (BCSA), which came into effect from January 21, 2022.

The BCSA agreement allows central banks to obtain foreign exchange from partner central banks by swapping each country's local currency in order to be exchanged back on the agreed due time period.

"The BCSA agreement makes it possible for exchanges in both (Indonesia's and China's) local currencies up to 250 billion Chinese Yuan (equivalent to about Rp550 billion), which is also equivalent to about US$38.8 billion," BI Chief Executive of Communications Erwin Haryono stated here on Thursday.

Haryono noted that BCSA is a form of bilateral financial cooperation that is commonly implemented by central banks.

Moreover, he explained that the cooperation agreement aims to encourage bilateral trade and direct investment in each country's local currency for encouraging economic development in both countries. In addition, the BCSA agreement demonstrates the commitment of both central banks to maintain financial market stability.

Apart from the People's Bank of China, BI has also forged financial cooperation with other central banks in several countries in the region, such as South Korea, Australia, Malaysia, and Singapore.

The BCSA between BI and POBC was first signed in March 2009 and has been through several amendments and extensions, Haryono highlighted.

According to Haryono, it reflects strong cooperation between BI and POBC in the field of finance. Thus, it is expected to further boost market confidence in both countries' economic fundamentals.

Meanwhile, the International Monetary Fund (IMF) has assessed that Indonesia's policies on macroeconomics and finance in tackling the COVID-19 pandemic and boosting economic recovery can grow credible market confidence, Finance Ministry's Head of the Fiscal Policy Agency, Febrio Kacaribu, stated.

Indonesia was observed as being a country that has successfully handled the pandemic without sacrificing on financial stability, Kacaribu remarked//ANT