Government and BNM to Continue Boosting Trade and Investment Mechanisms in Local Currency
Efforts to Encourage Local Currency Settlements
The government and Bank Negara Malaysia (BNM) have been exploring opportunities for local currency settlements with strategic countries since 2009. The finance ministry, in a written parliamentary reply, stated that this initiative will continue to strengthen and improve existing channels and mechanisms to facilitate trade and investment transactions in the local currency.
Increased Awareness and Demand
The increased use of local currency in regional trade settlements reflects a growing level of awareness and demand. However, the choice of settlement currency remains subject to the commercial decisions of trading companies, the ministry emphasized.
Objectives of the Initiative
The main objective of these measures is to enable the more efficient management of foreign exchange risk exposure, strengthening the economy’s resilience to external factors. The government and BNM have taken steps to encourage the use of the local currency in cross-border trade and investment settlements.
Strategic Partnerships
The government and BNM have explored opportunities for local currency settlements with strategic countries such as:
* China since 2009
* Thailand since 2016
* Indonesia since 2017
These countries have high bilateral trade values, and such initiatives have the potential to improve the efficiency and liquidity of local currency markets and can directly bring bilateral benefits to regional economies.
Conclusion
In conclusion, the government and BNM are committed to promoting the use of local currency in trade and investment transactions, which will contribute to the stability and sustainability of regional financial systems.
FAQs
* What is the main objective of the initiative?
+ The main objective is to enable the more efficient management of foreign exchange risk exposure, strengthening the economy’s resilience to external factors.
* Which countries have been involved in local currency settlements with Malaysia?
+ China since 2009, Thailand since 2016, and Indonesia since 2017.
* How does the initiative benefit the economy?
+ It has the potential to improve the efficiency and liquidity of local currency markets and can directly bring bilateral benefits to regional economies.