Four central banks widen local-currency pact. Cheaper payments are not yet proven

Signed on November 13, 2026, the memorandum covers cooperation on settling bilateral trade, investment and other eligible transactions in the participating countries’ currencies. It replaces the bilateral memoranda Indonesia, Malaysia and Thailand concluded in August 2023. This is an expansion of an existing system, not the invention of local-currency settlement and certainly not the launch of a common currency.⁠11

The distinction matters because the agreement’s ambitions and its delivered benefits are different things. The banks want more efficient settlements, fewer costs from repeated currency conversions and greater flexibility in managing foreign-exchange risk. Their announcement supplies no numerical savings estimate, measured improvement in settlement times or dated rollout milestone for the wider arrangement.⁠3

The signatories were Bank Indonesia Governor Destry Damayanti, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour, Bank of Thailand Governor Vitai Ratanakorn and Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. Their next task is to turn broader cooperation into services that businesses can actually obtain.⁠11

The Local Currency Transaction Framework, generally called LCT, addresses a practical problem: the currencies through which money passes between a buyer and a seller. Each conversion can bring a charge and another exchange rate to manage. A direct route can remove a conversion without removing currency risk altogether.

Bank Negara Malaysia’s explanation of the earlier three-country framework offers a concrete example. A Malaysian importer buying from an Indonesian exporter can use an appointed bank to convert ringgit directly into rupiah. The importer pays in rupiah, and the exporter receives rupiah without needing another conversion. The same illustration shows a ringgit-to-baht route for payments to a Thai exporter. Contracts can be denominated in ringgit, rupiah or baht.⁠14

That is an explanation of established channels, not confirmation that equivalent Philippine-peso services are already operational under the new memorandum. Nor does direct conversion freeze the exchange rate or guarantee a particular fee. The useful comparison for a customer is the total price and terms offered by the bank, not simply the number of currencies mentioned in the agreement.

The earlier Malaysian offerings also go beyond exchanging money for an immediate payment. They include spot, forward and swap foreign-exchange transactions, local-currency loans and financing for trade and direct investment, and local-currency deposit accounts. Listed uses include goods and services, direct investment, portfolio investment, income and transfers. Access therefore depends on both the underlying transaction and the bank handling it.⁠14

Indonesia’s cooperation with Malaysia and Thailand began with a memorandum in 2016 and implementation in 2018, according to ANTARA’s account of Bank Indonesia information. Subsequent changes broadened the rules and the banking network. The November 2026 signing builds on that history.⁠16

The operating guidelines sought to make procedures more consistent, transparent and capable of handling growth while accommodating each country’s regulatory requirements. Adding portfolio investments—holdings such as shares and bonds—extended eligibility beyond trade in goods and services and direct investment.⁠18

The dealer appointments addressed the other essential ingredient: banks able to provide the service. Known as Appointed Cross-Currency Dealers, these qualified commercial banks were added to widen customer reach and access to local-currency funding. The August 2025 additions covered all three currency pairs among Malaysia, Indonesia and Thailand. They were not a list of banks implementing Philippine participation in the November 2026 agreement.⁠12

There is evidence of substantial use before this signing. ANTARA reported on September 19, 2025, citing Bank Indonesia information, that Indonesia’s local-currency transactions reached US$14.1 billion equivalent through July 2025, against US$6.7 billion equivalent in the same period of 2024. The published growth figure was 112 percent; the dollar totals were rounded.⁠16

Those numbers need their boundaries kept intact. The account describes Indonesia’s earlier network, which had grown to six partner countries, and provides no partner-by-partner breakdown. It is not a transaction total for the four-country agreement signed in November 2026, nor a measure of Philippine participation. Dollar equivalents are the reporting unit, not evidence that the underlying payments were settled in dollars.⁠16

The same report put average monthly customers at 7,568 in the 2025 figures available then, compared with 5,020 in 2024. The later figure was an in-year average, not a completed full-year result. It supports the narrower conclusion that use of Indonesia’s existing channels had broadened before the new signing.⁠16

What remains missing from the new announcement is the operational detail needed to assess the expansion: a complete set of Philippine bilateral currency arrangements, a new four-country dealer list, detailed eligibility rules and a timetable. The banks promise continued development and gradual expansion, but do not identify a dated next step.⁠3

There is also no basis in the statement for treating the pact as a ban on dollar use or a requirement that every business switch settlement currencies. Its purpose is to promote and facilitate local-currency transactions. The test now is straightforward: which additional payments can banks execute, especially involving the Philippines, and what do customers demonstrably pay? Until those answers arrive, the achievement is wider cooperation—not proven savings.⁠11