Bilateral Currency Swap Agreement between Indonesia and Japan Renewed
The central banks of Indonesia and Japan have renewed their bilateral swap agreement (BSA) on October 15, 2024, aiming to strengthen financial cooperation between the two countries and provide a financial safety net for external resilience.
History of the BSA
The BSA was first signed in February 2003 and has been extended several times. The latest renewal was signed by Bank Indonesia Governor Perry Warjiyo and Bank of Japan Governor Kazuo Ueda, effective from October 14, 2024, to October 13, 2027.
Key Provisions of the BSA
The BSA allows for the exchange of Indonesian rupiah with US dollars and/or Japanese yen as a second line of defence in maintaining external resilience. This renewed cooperation enables Indonesia to exchange rupiah for US dollars and/or Japanese yen up to US$22.76 billion or the equivalent value in Japanese yen, according to Bank Indonesia’s Communication Department Executive Director Ramdan Denny Prakoso.
Objectives of the BSA
Indonesia and Japan view the extension of the BSA as a means to strengthen financial cooperation between the two countries, providing a financial safety net that is expected to contribute to financial stability at both regional and global levels. The extension of this cooperation also highlights the importance of international partnerships as part of Bank Indonesia’s policy mix, which is expected to enhance the external resilience of Indonesia’s economy, according to Prakoso.
Conclusion
The renewed BSA between Indonesia and Japan is a significant step towards strengthening financial cooperation and ensuring the stability of the international financial system. The agreement demonstrates the importance of international partnerships and cooperation in maintaining economic resilience and promoting financial stability.
FAQs
Q: What is the purpose of the BSA?
A: The BSA is a bilateral currency exchange agreement between Indonesia and Japan to strengthen financial cooperation and provide a financial safety net.
Q: When was the BSA first signed?
A: The BSA was first signed in February 2003.
Q: Who signed the latest renewal of the BSA?
A: Bank Indonesia Governor Perry Warjiyo and Bank of Japan Governor Kazuo Ueda signed the latest renewal.
Q: What are the key provisions of the BSA?
A: The BSA allows for the exchange of Indonesian rupiah with US dollars and/or Japanese yen up to US$22.76 billion or the equivalent value in Japanese yen.