In a significant move to enhance regional financial stability, Bank Indonesia (BI) and the Monetary Authority of Singapore (MAS) have agreed to extend their financial cooperation agreement for another three years, lasting until November 1, 2027. This renewal is seen as a key step in strengthening the bilateral relationship between the two central banks, which has already been in place since 2018. The decision to extend the agreement for a longer period reflects the evolving dynamics of global financial markets and the increasing need for collaboration in maintaining economic stability.

The cooperation between BI and MAS is underpinned by two important agreements: the Local Currency Bilateral Swap Agreement (LCBSA) and the Bilateral Repo Agreement (BRA). The LCBSA allows both central banks to swap their respective currencies—Indonesian Rupiah and Singapore Dollar—up to a total of 9.5 billion Singapore dollars (roughly IDR 100 trillion). This arrangement is vital for ensuring liquidity in the event of financial instability, as it provides each bank with access to the other’s currency when needed, strengthening the financial system in both countries.

In addition to the LCBSA, the Bilateral Repo Agreement (BRA) plays a crucial role in providing liquidity during periods of financial stress. Under this agreement, both banks can exchange government securities from the United States, Japan, or Germany for liquidity in US Dollars, Yen, or Euros, up to a maximum value of 3 billion US dollars. These repurchase agreements are an important tool for central banks to manage liquidity and ensure that they have sufficient resources to stabilize their economies.

The agreements were initially signed following a commitment made by the Presidents of Indonesia and Singapore in 2018, and their renewal signals the importance both countries place on mutual trust and collaboration. This partnership reflects the broader efforts of both central banks to safeguard their economies in an increasingly uncertain global landscape. By committing to long-term cooperation, Indonesia and Singapore are reinforcing their shared goal of financial stability while positioning themselves as active players in the global economy.

For Bank Indonesia, the extended cooperation is an important element of its broader strategy to ensure the stability of Indonesia’s financial system, particularly in light of fluctuating global market conditions. The partnership with MAS provides Indonesia with the tools to manage its monetary policy effectively and safeguard against economic shocks. Similarly, Singapore benefits from the agreement as it strengthens its financial resilience in a region that faces various geopolitical and economic challenges.

As global financial conditions continue to evolve, this extended partnership between BI and MAS could become even more crucial. The cooperation serves not only as a buffer against immediate financial disruptions but also as a means to foster deeper economic integration between Southeast Asia’s two largest economies.