Bank Indonesia (BI) and the People's Bank of China (PBOC) have renewed their Bilateral Currency Swap Arrangement (BCSA) for another five years. The agreement, signed by BI Governor Perry Warjiyo and PBOC Governor Pan Gongsheng, took effect on January 31, 2025. This arrangement allows both central banks to exchange local currencies up to CNY 400 billion, equivalent to USD 55 billion.

The BCSA, first established in 2009, has been renewed multiple times. This cooperation aims to support trade and direct investment between Indonesia and China by enabling transactions in local currencies. In addition to the BCSA, both countries have implemented a Local Currency Transaction (LCT) framework since 2021, which serves as the primary mechanism for trade and investment settlements.

Both central banks have committed to strengthening financial cooperation and market stability. They also aim to promote the broader use of local currencies in bilateral trade and investment. According to Bank Indonesia, renewing the BCSA aligns with its policy to maintain external sector resilience and ensure sufficient foreign exchange reserves.

This cooperation is part of a broader effort to enhance economic stability between Indonesia and China. By renewing the currency swap arrangement, both countries reaffirm their commitment to financial integration and stronger economic ties.

PHOTO: UNSPLASH

This article was created with AI assistance.