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Bank of Indonesia, the Hong Kong Monetary Authority and People’s Bank of China have signed a pact to promote bilateral transactions in Indonesian rupiah and offshore Chinese renminbi between Indonesia and Hong Kong, HKMA said in a statement late last week.

Under the memorandum of understanding, a bilateral currency transaction framework will be implemented to facilitate the direct exchange and settlement of IDR and RMB in cross-border trade and investment activities amongst corporates and institutions in Indonesia and Hong Kong, Hong Kong’s central bank and regulator said: “This initiative is designed to enhance the efficiency of cross-border transactions, while promoting greater use of regional currencies.”

The MoU underscores Hong Kong's aim to promote itself as a major cross-border financial jurisdiction in Asia, and globally. Boston Consulting Group recently reported that the Asian city has matched Switzerland in cross-border size and is set to overtake it. The move also highlights Indonesia’s own efforts to boost its financial clout.

The Hong Kong and Indonesian authorities will also identify and appoint selected banks in Indonesia and Hong Kong as Appointed Cross Currency Dealers to participate in the framework.

“The signing of this MoU marks an important step in deepening monetary and financial cooperation among the three authorities,” Eddie Yue, CEO of the HKMA, said. “Introducing the bilateral currency transaction framework for Hong Kong and Indonesia also marks a major breakthrough in promoting regional currency and renminbi use, and highlights Hong Kong’s value proposition as the offshore renminbi hub.”