On June 11th, the central banks of Indonesia, Hong Kong, and China signed a memorandum of cooperation to establish a collaborative framework aimed at promoting the use of the Indonesian rupiah and offshore renminbi in bilateral transactions between Indonesia and Hong Kong.

This memorandum will lead to the creation of a bilateral currency transaction framework. This framework is designed to facilitate direct conversion and settlement in rupiah and offshore yuan for cross-border trade and investment activities between Indonesian entities and companies and institutions in Hong Kong. The initiative aims to enhance the efficiency of cross-border transactions and encourage the broader use of regional currencies.

The central banks of Indonesia and Hong Kong will actively advance the preparatory work for this bilateral currency transaction framework, which includes establishing comprehensive operational guidelines. Both sides will also appoint several local banks as licensed cross-currency market-makers to participate in this framework. Details regarding the operational procedures, specific timeline, and the participating banks are expected to be announced later this year.

The Chief Executive of the Hong Kong Monetary Authority stated that this memorandum signifies a crucial step forward in deepening monetary and financial cooperation among the three central banks. He added that establishing a bilateral currency transaction framework between Hong Kong and Indonesia represents a significant breakthrough in promoting the use of regional currencies and the renminbi, highlighting Hong Kong's unique advantages as an offshore renminbi hub.