The Bank of Thailand together with Bank Indonesia (BI) and Bank Negara Malaysia (BNM) on Monday announced the launch of a local currency settlement framework between them to promote trade and investment trilaterally.
All three frameworks, namely the rupiah-ringgit framework, rupiah-baht framework, and expanded baht-ringgit framework, will be effective from Jan 2, 2018.
The move is in accordance with two bilateral memorandums of understanding on the local currency settlement framework that were signed between the three central banks on Dec 23, 2016.
The baht-ringgit settlement framework between BNM and the Bank of Thailand is also expanded to include direct investment to enrich existing trade transactions. The framework was launched on March 14, 2016.
"These initiatives are part of the continuous effort to promote a wider use of local currencies to facilitate and boost trade and investment in these countries," the Bank of Thailand said in a statement.
The three central banks have appointed financial institutions that fulfil key qualifications to enable bilateral trade within these frameworks.
"The appointed banks are resilient and healthy, have experience in facilitating trade between the two countries, have experience in business relationships with banks in the counterparty country, and have a broad customer base and branch offices in the home country," said the statement.
BI and the Bank of Thailand have appointed the following banks in Indonesia and Thailand to support the rupiah-baht framework: Bank Rakyat Indonesia, Bank Mandiri, Bank Central Asia, Bank Negara Indonesia, and Bangkok Bank in Indonesia; while Bangkok Bank, Bank of Ayudhya, Kasikornbank, Krungthai Bank, and Siam Commercial Bank were chosen in Thailand.
BNM and the Bank of Thailand have appointed the following banks in Malaysia and Thailand to support the ringgit-baht framework. The banks in Malaysia are CIMB Bank Berhad, Malayan Banking Berhad, Public Bank Berhad, RHB Bank Berhad, Bangkok Bank Berhad, Bank of Tokyo-Mitsubishi UFJ Malaysia Berhad, and United Overseas Bank Berhad.
The banks chosen from Thailand are Bangkok Bank, Bank of Ayudhya, CIMB Thai, Kasikornbank, Krungthai Bank, Siam Commercial Bank, and United Overseas Bank (Thai).