Central banks in Indonesia and Singapore have operationalised their bilateral settlement system, which highlights a step toward regional financial integration and currency diversification within ASEAN, VOI reports. Disclosed in an official joint statement released on August 31, Bank Indonesia (BI) and the Monetary Authority of Singapore (MAS) formally launched the Local Currency Transaction (LCT) framework, enabling direct trade and investment settlements using the Indonesian Rupiah (IDR) and Singapore Dollar (SGD). The implementation operationalises the bilateral Memorandum of Understanding (MoU) signed in August 2022 and joint Operational Guidelines finalised in April 2026.

According to BI Communication Department Executive Director Ramdan Denny Prakoso, the legal foundation for the framework is established under Bank Indonesia Regulation of the Board of Governors (PADG) No. 25 of 2026. The LCT framework allows designated Appointed Cross Currency Dealer (ACCD) banks in both jurisdictions to clear trade, direct investments, and cross-border payments directly in IDR/SGD without intermediary conversion through the US Dollar. It’s also more relaxed regulatory-wise, allowing for flexible underlying documentation thresholds and relaxed cross-currency hedging limits for commercial clients.

Key operational features include direct IDR/SGD exchange rate quotes and regulatory relaxations on foreign exchange hedging and underlying documentation. To execute cross-border settlements, BI and MAS appointed nine ACCD banks in Indonesia. Appointed Indonesian banks include PT Bank Central Asia Tbk [IDX: BBCA], PT Bank CIMB Niaga Tbk [IDX: BNGA], PT Bank DBS Indonesia, PT Bank Mandiri (Persero) Tbk [IDX: BMRI], PT Bank Maybank Indonesia Tbk [IDX: BNII], PT Bank Negara Indonesia (Persero) Tbk [IDX: BBNI], PT Bank OCBC NISP Tbk [IDX: NISP], PT Bank Pembangunan Daerah Jawa Timur Tbk [IDX: BJTM], and PT Bank UOB Indonesia. The three primary Singapore ACCD institutions include DBS Bank Ltd [SGX: D05], Oversea-Chinese Banking Corporation Limited (OCBC) [SGX: O39], and United Overseas Bank Limited (UOB) [SGX: U11].

The launch of the Indonesia-Singapore LCT framework highlights key developments for regional trade and banking. Encouraging importers, exporters, and foreign investors to adopt direct IDR/SGD invoicing reduces FX hedging costs and exposure to US dollar fluctuations.

Linking the LCT settlement framework with inter-operable cross-border QR code payments (QRIS-NETS) enables real-time retail settlement for tourists and SMEs. Strengthening bilateral LCT linkages between Indonesia, Singapore, Malaysia, Thailand, and the Philippines supports broader ASEAN financial resilience.