Philippines, Indonesia Expand Local Currency Payments
The Philippines and Indonesia will strengthen cross-border payment infrastructure to boost local currency settlements, reducing reliance on the US dollar for bilateral trade and remittances.
Key Takeaway
Philippines and Indonesia target lower remittance costs by cutting out dollar conversion in bilateral payments.
Philippine Foreign Affairs Secretary Ma. Theresa Lazaro co-chaired the eighth Joint Commission for Bilateral Cooperation meeting in Jakarta with Indonesian Foreign Minister Sugiono.
The two countries agreed to improve infrastructure for Philippines-Indonesia payment transactions and expand the use of local currency settlements. That means reducing reliance on third-party currencies like the US dollar for bilateral trade and remittances.
Lazaro said the meeting produced commitments on practical cooperation, including defense, border management, maritime, trade, and legal cooperation. The payment infrastructure push is part of a broader ASEAN initiative to link domestic real-time payment networks across borders.
The agreement aims to cut exchange costs for regional commerce and small businesses in the Philippines. Local currency settlements eliminate the need for costly currency conversions that typically involve dollar intermediation. The Philippine Department of Foreign Affairs has not yet outlined specific regulatory or technological mechanisms for implementation.
🇵🇭 Filipino Impact
Filipino exporters trading with Indonesia could see lower transaction costs once local currency settlement infrastructure goes live. OFWs in Indonesia may benefit from cheaper remittance channels that skip dollar conversion fees.
This article was written based on reporting from Fintechnews.
