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Four Asian Central Banks Sign Local Currency Pact

Malaysia, Indonesia, Thailand and the Philippines agreed to expand use of local currencies in cross-border trade and investment.

Updated on Nov. 13, 2026 in International Trade

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Central banks of Malaysia, Indonesia, Thailand and the Philippines signed a pact in Kuala Lumpur to settle cross-border trade in local currencies. AI Illustration. Upload story photo >

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The central banks of Malaysia, Indonesia, Thailand and the Philippines signed a memorandum of understanding on Friday in Kuala Lumpur to facilitate settlement of bilateral transactions in local currencies. The pact supersedes bilateral agreements that Malaysia, Indonesia and Thailand signed in August 2023.

Why it matters

The framework aims to reduce foreign exchange risks and the transaction costs of converting money through multiple currencies. Businesses trading across the four countries could see more direct settlement options as the initiative expands.

The pact unites four signatories in a single framework that supersedes three earlier bilateral agreements from August 2023. The extraction provides no transaction volumes or settlement figures, and the expected pace of expansion remains unquantified.

The players

Bank Negara Malaysia

Bank Negara Malaysia is the central bank of Malaysia, responsible for monetary policy and financial stability in the country.

Bank Indonesia

Bank Indonesia is the central bank of Indonesia, responsible for setting monetary policy and maintaining the rupiah's stability.

Bank of Thailand

The Bank of Thailand is the central bank of Thailand, responsible for monetary stability and the regulation of the country's financial system.

Bangko Sentral ng Pilipinas

Bangko Sentral ng Pilipinas is the central bank of the Philippines, responsible for monetary policy and the supervision of banks.

The details

The memorandum was signed by BNM governor Datuk Seri Abdul Rasheed Ghaffour, Destry Damayanti, Vitai Ratanakorn and Eli Remolona Jr. In February 2025, the three central banks introduced harmonised operational guidelines and extended the framework to portfolio investments, and a few months later additional commercial banks were appointed as cross-currency dealers.

Timeline

  1. August 2023: Malaysia, Indonesia and Thailand signed bilateral MOUs, now superseded.

  2. February 2025: Harmonised operational guidelines introduced and framework expanded to portfolio investments.

  3. A few months after February 2025: Additional commercial banks appointed as cross-currency dealers.

  4. November 13, 2026: Four-country central bank pact signed.

Market Dynamics

The pact consolidates the bilateral MOUs that Malaysia, Indonesia and Thailand signed in August 2023 into a single framework and adds the Philippines. It builds on those earlier arrangements, which the February 2025 guidelines and expanded scope already advanced, as the region seeks to reduce reliance on the dollar in intra-regional trade.

Businesses that trade or invest between these four countries may face fewer currency conversions and lower exchange costs as local currency settlement expands. The extraction does not specify when individual firms will gain access to these settlement options.

The takeaway

Companies with regional supply chains should watch whether their banks offer local currency settlement under the expanded framework. Reducing conversion steps can lower costs over time.

Further reading

For more on how trade settlement works across borders, explore International Trade coverage on Wisevoter.

Live Poll

Do you think closer regional currency trade will make everyday prices lower?