Bank Indonesia and Reserve Bank of Australia Renew Bilateral Swap Agreement

Bank Indonesia

The bilateral swap agreement in the local currency of each country or the Bilateral Currency Swap Arrangement (BCSA) will soon be subject to an agreement renewal by Bank Indonesia and the Reserve Bank of Australia. It is planned that the implementation of this agreement will be effective from 18 February 2022.

Previously, this agreement had been carried out by both banks. It is noted that the two banks first entered into an agreement in December 2015 and have been extended for 3 (three) years since then.

Furthermore, the cooperation agreement between these giant banks aims to encourage bilateral trade between Indonesia and Australia. The goal is to encourage the economic development of the two countries.

Furthermore, this bilateral swap agreement is also an effort to support the settlement of trade transactions in the local currencies of each country.

Following the previous facility, the agreement allows for exchanges in each country’s local currency of up to A$10 billion or IDR100 trillion. The agreement will be effective for three years and can be extended upon the agreement of the two central banks.

The BCSA cooperation agreement between Bank Indonesia and the Reserve Bank of Australia was signed by Governor Perry Warjiyo and Governor Philip Lowe. The extension of the agreement also reflects the ongoing strengthening of cooperation between Bank Indonesia and the Reserve Bank of Australia.

BSCA is a form of bilateral financial cooperation commonly carried out by central banks. This agreement allows a central bank to obtain foreign currency from partner central banks by exchanging the local currency of each country, to be exchanged again at the agreed maturity date.

Bank Indonesia does not only cooperate with Australia, but they also conduct financial cooperation with other central banks in several countries, namely China, South Korea, and Malaysia.