Google Advertisement
Jakarta, June 15, 2026 — Bank Indonesia (BI) has entered into a landmark cooperation with the People’s Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) to strengthen the rupiah against persistent dollar pressures.
The agreement, signed in Shanghai on June 11, underscores Indonesia’s push to reduce reliance on the U.S. dollar and deepen regional financial integration.
Expanding Local Currency Use
The centerpiece of the deal is a bilateral currency swap arrangement between BI and PBOC.
Google Advertisement
This mechanism allows both central banks to exchange rupiah and renminbi directly, providing liquidity support and reducing exposure to dollar volatility.
In parallel, BI expanded its Local Currency Transaction (LCT) framework to include Hong Kong.
With HKMA Chief Executive Eddie Yue joining the pact, trade and investment flows among Indonesia, China, and Hong Kong can now be settled in local currencies.
Digital Payment Integration
The agreement also introduces cross-border QR payments.
Indonesia’s QRIS system will connect with China’s payment infrastructure, enabling seamless transactions across 191 providers in China and 24 in Indonesia.
This integration is expected to lower transaction costs for businesses and consumers, while supporting Indonesia’s fast-growing digital economy.
Additionally, Bank Mandiri has been designated a direct participant in China’s Cross-border Interbank Payment System (CIPS), enhancing clearing and settlement efficiency for trade and investment flows.
Economic Stakes
Indonesia’s trade with China reached USD 154.5 billion in 2025, making China its largest trading partner.
Settling transactions in rupiah and renminbi could reduce foreign exchange risks and stabilize the rupiah, which has faced persistent depreciation pressures amid global dollar strength.
BI Governor Perry Warjiyo emphasized that the cooperation is part of a broader strategy to “strengthen monetary stability and support economic resilience.”
PBOC Governor Pan Gongsheng echoed the sentiment, noting that the pact aligns with China’s efforts to internationalize the renminbi.
Despite the ambitious scope, challenges remain.
The U.S. dollar continues to dominate global reserves and trade settlements, limiting the immediate impact of local currency initiatives.
Technical integration of QRIS and CIPS systems will require robust cybersecurity and regulatory coordination.
Market confidence is another critical factor. Sustained rupiah stability will depend not only on bilateral agreements but also on Indonesia’s broader fiscal discipline and monetary credibility.
Regional Significance
The cooperation signals a growing trend in Asia toward currency diversification and reduced dollar dependence.
For Indonesia, it represents both a defensive measure against external shocks and a proactive step toward embedding itself in regional financial networks.
As global markets continue to grapple with dollar volatility, BI’s partnership with PBOC and HKMA may serve as a blueprint for other emerging economies seeking to balance stability with sovereignty in monetary policy.
