BI Partners with China's Central Bank to Shield Rupiah from Dollar Pressure
Bank Indonesia (BI) and the People’s Bank of China (PBOC) held a high-level meeting (HLM) under their Joint Work Programme last week in Shanghai, China. The meeting, attended directly by BI Governor Perry Warjiyo and PBOC Governor Pan Gongsheng, produced six key outcomes.
Firstly, a synergy to strengthen not only the financial resilience of each country but also to contribute to broader regional financial stability. This cooperation simultaneously supports both central banks’ efforts to maintain exchange rate stability.
Secondly, an exploration to enhance the Bilateral Currency Swap Agreement (BCSA) and a reaffirmed commitment to increase the use of local currencies in bilateral transactions, as well as to strengthen cross-border payment connectivity between Indonesia and China.
Thirdly, Governor Pan Gongsheng stated that China and Indonesia, as major economies and strategic partners in the region, share a responsibility to deepen bilateral economic and financial cooperation. Strengthening this cooperation is expected to contribute to regional prosperity and stability while supporting the economic resilience of both nations.
Fourthly, Perry emphasised that future financial cooperation will strengthen local currency transactions between Indonesia and China, develop financial infrastructure, and expand inter-central bank cooperation, including the establishment of an RMB Clearing Bank in Indonesia.
Fifthly, the two central banks agreed on four key deliverables from the meeting:
The signing of a Memorandum of Understanding (MoU) on Local Currency Transaction (LCT) between BI, PBOC, and the Hong Kong Monetary Authority (HKMA), covering Indonesia and Hong Kong. This cooperation strengthens the existing LCT framework to promote the use of local currencies in bilateral transactions, improve transaction efficiency, and support deeper regional financial market integration.
The signing of an MoU on the Establishment of a Renminbi Clearing Arrangement in Indonesia between BI and PBOC to support the development of the domestic RMB ecosystem by providing adequate Renminbi liquidity for trade, investment, and financial activities.
The launch of the implementation of Indonesia-China cross-border QR payments. Supported by the LCT framework, this initiative enables cross-border retail transactions to be conducted more easily, quickly, efficiently, inclusively, and reliably, while supporting closer digital economic connectivity between the two countries.
The launch of Bank Mandiri’s membership as a direct participant in the Cross-border Interbank Payment System (CIPS). This participation aims to improve the efficiency of the clearing and settlement process for Indonesia-China transactions, while strengthening the resilience of cross-border payment infrastructure.
Finally, BI and PBOC’s commitment to advancing economic and financial integration through the expansion of payment system connectivity and the development of more efficient, inclusive, and robust financial markets will further strengthen economic stability and financial system resilience in both countries.